Financial Management Association International

The 5th article in the FM Summer 2026 (Volume 55, Issue 2) issue is "Inalienable Human Capital and Inevitable Corporate Payouts" by Shuxun Cai (Xiamen University), Kose John (New York University), Xiaoran NI, and Chi Zhang (University of Massachusetts Lowell).

Abstract:
We highlight that the inalienable nature of human capital can crucially determine the division of economic gains between shareholders and other counterparts in view of corporate payouts. Exploiting the staggered rejections of the inevitable disclosure doctrine (IDD) across 15 US states as exogenous shocks that potentially increase the mobility and bargaining power of key talents, we find that treatment firms increase payouts relative to control firms following those events. The baseline effects are more pronounced among firms that are more reliant on key human capital, have better corporate governance and stronger financial conditions, and are faced with greater product market competition. These findings suggest that higher payouts enable shareholders to deter the capture of economic rents by key talents who threaten to leave. That is, due to shareholders’ counteraction, the inalienable nature of key human capital, a subgroup of labor, may unintendedly result in an unfavorable division of economic gains for labor as a whole.

🔗 Read the full article: https://onlinelibrary.wiley.com/doi/abs/10.1111/fima.70007

Financial Management article "Shareholder Activism: Affliction for Incumbent CEOs?" by Jana P. Fidrmuc (University of Warwick), Jesus Gorrin (Universitat de les Illes Balears), and Jiaqi Zhao is now available in Early View.

Abstract:
We study how shareholder activism shapes CEO careers by distinguishing between two competing hypotheses: discipline and reallocation. Employing a control function approach with expected mutual fund fire sales and purchases as exclusion restrictions, we analyze 3799 US campaigns from 2006 to 2018. We show that shareholder activism affects CEO careers primarily through a reallocation mechanism. It accelerates CEO turnover and strips inside directorships, but it does not impair external career prospects. Targeted CEOs frequently transition to leadership roles in private firms, and their outside directorships are largely unaffected. We further document significant heterogeneity by campaign hostility. The baseline results apply to nonhostile campaigns. Hostile campaigns, in contrast, impose broad and persistent career penalties, consistent with the disciplining hypothesis. Finally, we find that hedge funds differ from other activists primarily in nonhostile campaigns, where their interventions produce more pronounced CEO career adjustments.

🔗 Read the article: https://onlinelibrary.wiley.com/doi/full/10.1111/fima.70054

🏆 Congratulations to the 2026 FMA European Conference Best Paper Award winners!

Best Paper in Asset Pricing and Investments
“The Price of Political Partisanship” by Alex Pasler, WU (Vienna University of Economics and Business)

Best Paper in Corporate Finance and Financial Institutions
“The Transmission of Corporate Tax Cuts to Consumer Loans: Evidence from the TCJA” by João Granja, University of Chicago; Fabian Nagel, Stanford University; Arndt Weinrich, Erasmus University Rotterdam

Best Pitch Award
“Fast Flow in Slow-Moving Market: Leveraged Loan Fund Flow and Real Activity” by Wing Lam Cheung, University of Lausanned and Swiss Finance Institute

✨ Thank you to everyone for making this year's conference a success! Universidade do Minho (conference partner and sponsor), Wharton Research Data Services (WRDS) (DSC sponsor), International Journal of Financial Studies (best paper award sponsor), presenters, and attendees.

🎓 Program Co-Chairs:
Manuel Armada, Professor in Full of Finance, Universidade do Minho
Cláudia Custódio, Professor of Finance, Imperial College London
Cesario Mateus, Professor of Finance, Aalborg University Business School
Pedro Matos, James A. and Stacy Cooper Bicentennial Professor of Business Administration, John G. Macfarlane Family Chair & Academic Director of Richard A. Mayo Center for Asset Management, University of Virginia Darden School of Business

Access the papers here: https://www.fma.org/conference-awards

The fourth article in the FM Summer 2026 (Volume 55, Issue 2) issue is "Sovereign Credit Default Swaps and Corporate Investment" by Hsien-Yi Chen, Sheng-Syan Chen, Feng-Tse Tsai, and Ya-Wen Chen.

Abstract:
We investigate the impact of sovereign credit default swap (CDS) introduction on corporate investment. Our analysis reveals that the launch of sovereign CDS significantly expands national credit supply and boosts aggregate investment levels. We further document a positive and statistically significant effect of sovereign CDS introduction on firm-level investment. Crucially, we find that this positive relationship is primarily observed in the subsample of firms without existing CDS trading and is more pronounced for politically sensitive firms. This beneficial effect is driven by the supply of domestic private credit and is amplified in countries characterized by weaker legal environments and lower information transparency. Collectively, our findings suggest that sovereign credit market innovation plays a vital role in channeling firms toward productive investments.

🔗 Read the full article: https://onlinelibrary.wiley.com/doi/abs/10.1111/fima.70004

The third article in the FM Summer 2026 (Volume 55, Issue 2) issue is "Financial Statement Readability and Firm Debt Choice" by Wajih Abbassi, HAMDI BEN-NASR, Sabri Boubaker, and Arman Eshraghi.

Abstract:
Examining more than 16,000 firm-year observations in the United States, we provide novel evidence showing that higher financial statement readability leads to a decrease in information asymmetry and the need for external monitoring, thereby reducing the reliance on bank debt relative to public debt. Our channel tests show that information asymmetry, as measured by the bid–ask spread, partially mediates the relationship between readability and the bank debt ratio. Furthermore, cross-sectional tests demonstrate that information environment quality and financial constraints exacerbate the negative effect of readability on the bank debt ratio. Our results remain robust to a battery of additional tests. The study provides valuable insights for investors, firms, and regulators to improve transparency and market efficiency.

🔗 Read the full article: https://onlinelibrary.wiley.com/doi/full/10.1111/fima.70003

The second article in the FM Summer 2026 (Volume 55, Issue 2) issue is "A Theory of the Boundaries of Banks With Implications for Financial Integration and Regulation" by Falko Fecht, Roman Inderst, and Sebastian Pfeil.

Abstract:
We offer a theory of the “boundary of the firm” that is tailored to banks, recognizing the relevance of deposit financing and interbank lending as a substitute for integration. It is based on a single inefficiency that has been at the core of banking theory: risk-shifting incentives in the interest of bank shareholders. We explain why deeper economic integration should also cause greater, albeit incomplete, financial integration through both bank mergers and interbank lending. Despite its simplicity, the model can help understand several significant historical trends in the US banking industry.

🔗 Read the full article: https://onlinelibrary.wiley.com/doi/full/10.1111/fima.70002

The first article in the FM Summer 2026 (Volume 55, Issue 2) issue is "Revisiting Asset Pricing Models: The Case for an Intangibles Factor" by Dion Bongaerts (Rotterdam School of Management, Erasmus University), Xiaowei Kang, and Mathijs van Dijk.

Abstract:
In an increasingly knowledge-based economy, intangible assets may be an important driver of firm performance and stock returns. We introduce an intangibles intensity factor (INT), distinct from the organization capital factor, and show that exposure to this factor strongly predicts stock returns, outperforming traditional factors. Integrating INT into the Fama–French five-factor (FF5) and q-factor models significantly enhances explanatory power across multiple tests and renders the investment factor redundant. An INT-augmented five-factor model (comprising market, size, profitability, momentum, and intangibles factors) outperforms the FF5 and q-factor models in explaining a broad set of anomalies, highlighting the diminishing relevance of the book-to-market and investment factors.

🔗 Read the full article: https://onlinelibrary.wiley.com/doi/full/10.1111/fima.70001

🚨 Check your inbox! The Summer 2026 (Volume 55, Issue 2) issue of Financial Management is now available.

🔗 View the issue: https://onlinelibrary.wiley.com/toc/1755053x/2026/55/2

📣 Financial Management Association International is pleased to announce the 2026 Conference on Derivatives and Volatility on 13 - 14 November at Cboe Global Markets in Chicago, IL.

🎓 This year's conference will feature Keynote Speaker Darrell Duffie, The Adams Distinguished Professor of Management and Professor of Finance at Stanford University’s Graduate School of Business. He is a Research Fellow of the National Bureau of Economic Research and a Fellow of the American Academy of Arts and Sciences.

🎓 Program Co-Chairs:
Torben Andersen, Nathan S. and Mary P. Sharp Professor of Finance, Northwestern University
Bjorn Eraker, Professor of Finance and Bill Nygren Chair in Investments, University of Wisconsin-Madison

📅 Paper submission deadline is 15 July 2026. Learn more and submit your paper today: https://www.fma.org/2026-conference-on-derivatives-and-volatility

Financial Management article "Brand Equity and Debt Diversification" by David C. Mauer, Yu Miaomiao, and Aihuan Zhang is now available in Early View.

Abstract:
This study examines how brand equity influences the diversity of firms’ debt structures. We propose that brand equity, by signaling larger and more stable future cash flows and greater product market awareness, alters the fundamental trade-offs that drive optimal debt type diversity. Specifically, strong brand equity may enable greater debt diversity by reducing the costs of creditor coordination failure and reducing the firm's exposure to lender-specific shocks. Using trademarks to proxy for brand equity, we find a robust positive relationship between brand equity and debt diversity. Quasi-natural experiments support a likely causal interpretation of this effect. Cross-sectional tests further reveal that the relationship is more pronounced for firms facing greater information asymmetry and heightened product market competition. Our results are robust to alternative measures of brand equity and debt diversity.

🔗 Read the article: https://onlinelibrary.wiley.com/doi/full/10.1111/fima.70053