Fernando Anjos

Associate Professor of Finance

NOVA SBE

Recent work

Recently presented at the Sustainable and Impact Investments International Conference and at the Exeter Sustainable Finance conference.
Abstract: Societal concern for sustainability has increased markedly, and many firms now frame pro-social objectives as part of core business practices. Yet corporate action often appears misaligned with these stated preferences, fostering the perception that meaningful change is unfolding too slowly. We develop a model that can help explain this disconnect by incorporating a novel behavioral dimension into an otherwise standard principal-agent framework. Specifically, economic actors experience greater elation from the success of greener projects and greater disappointment from their failure. We show that while this preference structure can, under some conditions, promote the adoption of greener projects, it can also induce brownshifting---where the agent selects a relatively less green project. We contribute to the literature by introducing a mechanism that implies heterogeneous firm responses to increased pro-social preferences and can help explain apparent incongruences between sustainability discourse and corporate action.

Value-Maximization Spillovers in Merger Markets, with Luiza Llussá and Miguel Oliveira, Nov-25

M&A Handbook, chapter on conglomeration (forthcoming), Dec-25, with Cláudia Custódio and Rui Silva (eds. Ran Duchin and Jarrad Harford)

Third-Party Bailouts and Tough Lenders (short paper), with Irem Demirci and Miguel Oliveira, Oct-25

Abstract: Contrary to the standard view, we argue that bailouts can sometimes alleviate moral hazard. In our model, a lender who interacts with a sequence of borrowers may wish to cultivate a reputation for toughness, by liquidating projects following default. However, when the opportunity cost of liquidation is high and the lender cannot publicly commit to randomization, such reputation may be unsustainable. In a subset of such cases, the possibility of a third-party bailout by the government or another investor is essential for the lender to build/maintain a reputation, by reducing the lender's short-term incentives to deviate from tough play.

Abstract: We extend the canonical moral hazard model in corporate finance to include specialized distress investors (SDIs) who privately bail out financially distressed firms. First, we show that SDIs can negatively impact credit rationing ex ante, even when SDIs create value and even though initial lenders are required to agree to SDI participation. Second, we show that SDI presence lowers project NPV when initial lenders can exploit a value-destroying SDI’s technology to expropriate equityholders ex post. These negative results notwithstanding, we also show that firms can sometimes mitigate these effects by reducing leverage and/or by focusing on projects with certain characteristics.

Publications

Networks in the Balance: An Agent-Based Model of Optimal Exploitation, with Ray Reagans, Journal of Organization Design, vol. 9, October 2020

Technological Specialization and the Decline of Diversified Firms, with Cesare Fracassi, Journal of Financial and Quantitative Analysis, vol. 53, August 2018, pgs. 1581-1614

Managerial Myopia, Financial Expertise, and Executive-Firm Matching, with Chang-Mo Kang, Journal of Corporate Finance, vol. 43, April 2017, pgs. 464-479

- best paper award at 2014 FIRN conference

Social Ties and Economic Development, with Jose Anchorena, Journal of Macroeconomics, vol. 45, September 2015, pgs. 63-84

Inter-Company Matching and the Supply of Informed Capital, with Alejandro Drexler, Journal of Economic Behavior and Organization, vol. 111, March 2015, pgs. 119-136

Shopping for Information? Diversification and the Network of Industries, with Cesare Fracassi, Management Science, vol. 61, no. 1, January 2015, pgs. 161-183

Other Working Papers

Conglomerates with Financial Divisions: An Internal Capital Markets Perspective, with Cláudia Custódio, Nuno Fernandes, and João Magro, Mar-18

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