Research

I investigate the link between firms' voluntary disclosure strategies on social media and their equity returns. I construct a novel and comprehensive database of over 7 million tweets posted by S&P 1500 firms and use text analysis methods to assess the effect of corporate tweets on announcement returns. I find evidence consistent with firms using the timing, tone, and content of tweets strategically. Firms with negative earnings surprises have higher announcement returns when they tweet about financial news, suggesting that firms can use social media to bolster their stock prices during periods of poor performance. This result holds mainly for firms with higher retail investor ownership, consistent with social media being a primary information source for investors with a high cost of information acquisition and processing.

We analyse the determinants of coverage ratios and their components [non-performing loans (NPLs) and loss loan reserves] in a large sample of European banks. We find that bank-specific factors, particularly credit risk variables (including forward-looking indicators) and capitalization, matter the most. Coverage ratios adjust insufficiently as asset quality deteriorates, except in high-NPL banks. Capitalization has a positive effect on coverage ratio, pointing to a complementarity between the two buffers. At the country level, specific macroprudential levers and developing NPL secondary markets enhance coverage ratios. Our findings emphasize the importance of micro oversight and call for more stringent macro policies in high-NPL countries. 

This paper provides empirical evidence on the effects of both outside and inside ownership on bank risk-taking and performance. Much of the analysis in this paper focuses on inferences based on instrumental variables (IV) approaches. To implement our IV approach we build a new database of enforcement actions and consent orders against banks to isolate the exogenous change in ownership and to examine whether ownership structure affects bank risk. We focus on ownership changes around enforcement action announcements and investigate the classic conflicts between bank managers and diversified owners.