Online reputation matters in the food industry. With every star earned on Tripadvisor, for example, a popular eatery can attract more customers, bolster revenue and expand its business. What’s more, new research by HEC Professor of finance François Derrien and co-authors Alexandre Garel (Audencia Business School), Arthur Romec (TBS Business School) and Jean-Philippe Weisskopf (EHL Hospitality Business School) have confirmed there is a causal link between a restaurant’s ratings and its ability to service additional debt, making it easier for lenders today to identify successful restaurants and drive their growth.
By François Derrien
If companies anticipate that the government might impose caps on carbon emissions, they will likely invest in green technologies. This, in turn, drives down the cost of achieving reductions for all. That’s according to HEC Paris finance professors Augustin Landier and Bruno Biais. In “Emission Caps and Investment in Green Technologies,” the co-authors also show that if these firms don’t think carbon restrictions are coming, they won’t invest, and the government eventually will find it too costly to the economy to impose caps. In other words, companies’ expectations about future government action play a crucial role in reducing the carbon emissions driving rapid climate change. So, ask the researchers, how can a balance be found? 4 key findings: Anticipating future regulations spurs green technology investments, lowering emission reduction costs; Early investments in green technologies create a self-fulfilling prophecy, facilitating feasible emissions caps; Private and public actions synergize for desired outcomes through a complementary equilibrium; One large investor can have a significant influence.
By Bruno Biais , Augustin Landier
Despite environmental, social, and governance (ESG) funds gaining popularity, their impact on reducing negative externalities, such as greenhouse gas emissions, may be limited if not approached strategically. In our study, entitled “ESG Investing: How to Optimize Impact,” forthcoming in the Review of Financial Studies, we show that investment capital could actually influence the behavior of more highly polluting companies to drive positive change for the planet.
By Stefano Lovo , Augustin Landier
Individual states and intergovernmental organizations increasingly use financial sanctions to punish or influence the behavior of targeted entities. However, a recent study by Matthias Efing of HEC Paris, Stefan Goldbach of Deutsche Bundesbank, Germany, and Volker Nitsch of CESifo and Technische Universität Darmstadt, Germany, shows that even universally adopted sanctions can distort bank capital flows and competition if they are not uniformly enforced.
By Matthias Efing
Gender diversity in corporate boards of directors has long been on the agenda, but whether and when investors reward companies that make efforts towards such inclusion remains an open question. Researchers in Accounting Crystal Shi (HEC Paris), April Klein and Mary Brooke Billings (New York University) investigate whether the #MeToo movement had an impact on investors' perceptions of the benefits of having a diverse and inclusive corporate culture, as reflected by the gender makeup of corporate boards.
By Crystal (yanting) Shi
More than a decade ago, the euro area went through a sovereign debt crisis, in which governments of Southern Europe faced high borrowing costs compared with countries in the north of the euro area. Ultimately, such high borrowing costs led Greece to default on its sovereign debt. In this article, Eric Mengus, Associate Professor of Economics at HEC Paris, explains the euro area sovereign debt crisis and the lessons to take from it, based on his new research, “Asset Purchase Bailouts and Endogenous Implicit Guarantees”, forthcoming in the Journal of International Economics.
By Eric Mengus
The Environmental, Social and Governance (ESG) performance of companies has become an increasingly significant factor influencing investor sentiment in recent years. But does this hold for all investors? A recent study by HEC Paris Finance researchers Maxime Bonelli and François Derrien, with Marie Brière of Amundi Asset Management, Paris Dauphine University and Université Libre de Bruxelles, investigated the response of French employee shareholders to ESG performance through their personal investment behavior in their employers’ share schemes. The results show that these employees have a distinctly different response to the ESG performance of their employers: one that is focused on their personal welfare.
By Maxime Bonelli , François Derrien
Noémie Pinardon-Touati, newly Assistant Professor at Columbia University and holder of a PhD in Finance from HEC Paris, investigates how governments affect the economy, with practical implications for policymakers. In this interview based on her research, she explains how the increase of local governments’ reliance on bank debt adversely affects firms, and thereby hinders growth.
The advent of digital technologies has created a very new and vastly different financial landscape. Today's buying and selling of securities is conducted mostly by computer programs that react within nanoseconds – faster than any human could – to the subtlest market fluctuations. In a new report published by the Centre for Economic Policy Research (CEPR), Professor of Finance Thierry Foucault comes to grips with how technologies are fundamentally changing the way banks, brokers, exchanges, and dealers do their work, and what it means for investors, for privacy and income inequalities.
By Thierry Foucault
The methods and aims of activist short sellers and financial analysts are often at odds. In a highly competitive environment, there is a battle for narrative authority, with short sellers often criticizing analysts. New research examines this struggle, and how — or if — analysts respond to challenges.
By Hervé Stolowy , Luc Paugam
