Research

We examine how economic policy uncertainty (EPU) affects small business valuations using a large dataset of private acquisitions. During periods of elevated EPU, buyers pay significantly less relative to asking prices and negotiate more buyer-friendly deal terms, patterns consistent with heightened risk aversion, financing constraints, and behavioral frictions. These effects are concentrated among larger firms and vary across industries, with pronounced impacts in consumer-facing and regulation-sensitive sectors. To strengthen causal inference, we employ an instrumental variables strategy using Canadian EPU as an exogenous proxy. Our findings suggest that elevated uncertainty depresses small business valuations and alters deal structures in favor of buyers. By extending research on policy uncertainty to private markets, we show how non-crisis uncertainty can reduce entrepreneurial wealth and complicate exit planning. The results offer actionable insights for owners, brokers, and policy-makers seeking to improve business transfer outcomes in uncertain environments.

Several variants of the classical bivariate and multivariate generalized Pareto distributions have been discussed and studied in the literature (see Arnold (1983, 1993, 2015), Arnold and Laguna (1977), Ali and Nadarajah (2007), Rootzen and Tajvidi (2006) and the references cited therein). Ali and Nadarajah (2007) studied a truncated version of the most popular long-tailed generalized bivariate Pareto distribution (GBPD, henceforth, in short) involving six parameters. However, not much discussion exists in the current literature on the structural properties as well as on the dependence structure among the parameters in this model. In this paper we re-visit the GBPD and discuss several other new properties. In addition, we study the shape of GBPD for varying choices of the model parameters and subsequently study their interdependence. Also, we provide copula based construction of GBPD and discuss the associated local dependence measures.

Understanding which information processing costs bind investors is a central question in accounting research (Blankespoor, deHaan, and Marinovic, 2020). We exploit the Department of Education's (DOE) March 2025 press releases publicly targeting specific institutions of higher education (IHEs) for alleged discrimination violations-announcements that dramatically reduced awareness and acquisition costs relative to the standard municipal disclosure system. In the municipal bond market, limited investor response to disclosures is attributed to pre-disclosure information acquisition, untimely filings, illiquidity, and information processing constraints that are difficult to disentangle. Consistent with investors integrating the DOE press releases as a potential federal funding risk, we find that targeted IHEs experience higher yields and credit spreads in both secondary and primary markets. The premium concentrates among IHEs with the greatest federal grant funding at risk and is absent for IHE bonds with different obligors and for untargeted IHEs engaged in the same alleged policy violations. These findings suggest that awareness and acquisition costs, driven by untimely filings that arrive after investors have already sought information elsewhere, are the binding frictions in the municipal bond market, and that once those frictions are reduced, municipal bond investors integrate credit-relevant information with sophistication. 

Peer-to-peer (P2P) lending is a revolutionary financial service that seeks to usurp the role of the bank in the lending process by directly matching borrowers to lenders. Like many other FinTech innovations, P2P lending platforms enjoy less regulatory oversight and less restrictive “skin-in-the-game” requirements than their traditional financial counterparts. On one hand, proponents of the relaxed regulatory environment argue that the freedom allows P2P platforms to meet unmet financial needs and there are mechanisms in place (like data transparency) that are as good as official regulatory oversight. Others argue, however, that the existing mechanisms that should align the interests of P2P platforms and their investors fail to mitigate potential conflicts of interest between the two parties. Using a regulatory event as a shock to LendingClub’s investors’ trust, my preliminary results support the latter perspective by showing LendingClub inflated the credit ratings of its loan products prior to its 2016 investment fraud scandal, consequently subjecting its investors to unnecessary risk and financial loss.