Abstract: This paper studies how shareholder democracy, modeled as shareholder voting on corporate social positions, affects competition for capital in equity markets where investors have homogeneous preferences over financial returns but heterogeneous preferences over social impact. The firms' initial owners/managers choose the level of social impact at the financing stage; the investors may subsequently vote to shift the firms' social positions at a cost at the voting stage. Investors self-select into firms based on both financial and social preferences, and this endogenous sorting influences firm behavior and market outcomes.  We find shareholder voting results in less extreme firm positions than those chosen initially by managers, thereby intensifying price competition and reducing equilibrium differentiation. Paradoxically, shareholder democracy on social impact leads to improved social welfare, although it may result in a lower average social impact and a smaller investor base for the more pro-social firm.  We also highlight the role of externalities in investor utility: when investors care about the social behavior of both firms, not just the one in which they hold shares. Greater awareness of externality further amplifies strategic interactions. Our findings offer new insights into how shareholder democracy and endogenous shareholder composition jointly shape firm strategy in competitive capital markets.

Abstract: This paper provides both theories and empirical evidence on how portfolio overlap among agents and their rivals discourages overt information acquisition and impairs the overall information environment. We theorize that overt information acquisition leads to lower payoffs within a tournament-based incentive structure, and that portfolio overlap amplifies this effect because rivals can more easily capitalize on the rents from information spillovers, putting the agent at a disadvantage during competition. To test these predictions, we examine China's Regulation Fair Disclosure, specifically the corporate site visit disclosure regulation, which mandates the timely disclosure of minutes of discussions between site visitors and firm management. This regulation shifts site visits from private information-gathering activities to overt ones, enabling non-visiting analysts to access previously private insights acquired by visiting analysts. We find that after the regulation, analysts with higher portfolio overlap with their peers make fewer site visits, especially when career concerns are more pronounced and when the information commonality among portfolio firms is stronger. As a result, firms with analysts who have higher portfolio overlap experience a significant deterioration in their information environment. Taken together, this study demonstrates that portfolio overlap, a common phenomenon in capital markets, intensifies adverse information competition and impedes overall information discovery.

Abstract: Equity roadshows are a well-studied phenomenon, and the literature has found that their primary purpose is to reduce information asymmetry and underpricing. However, little is known about the determinants and real effects of bond roadshows. This paper examines why firms decide to conduct a roadshow when issuing bonds and their real effects on the cost of bonds - a literature gap possibly due to a lack of readily available data, which we had to manually collect. We conduct surveys with underwriters and issuers to gain their insights on the role of bond roadshows and obtain two conflicting answers: according to underwriters, bond roadshows have an informational role, while according to issuers, they have a marketing role. We test these opposing views in the German bond market (2014–2023), finding evidence in support of the marketing role. We show that bond roadshows aim to raise investors' attention and increase their demand in the primary market, possibly to establish a network of institutional investors. The different role that bond roadshows have compared to equity roadshows underscores the importance of closing the literature gap and studying their real effects. We test and find that bond roadshows reduce the cost of bonds for firms, reducing bonds' final spread and substituting for the need for underpricing to ensure successful issuance. These findings offer novel insights into the role of the investors' networks in bond markets, highlighting how roadshows influence capital-raising outcomes.