Working Papers

We investigate whether herding behaviour of bond funds influences corporate bond issuance. Using quarterly data from 1998 to 2018, we find that only buy herding significantly increases bond issuance activity. Further analysis supports an informational channel, suggesting that 'investigative herding' among funds enhances credit information efficiency more significantly than demand-driven price impacts. Our main identification strategy employs an instrumental variable approach, based on the share of  inexperienced managers among fund bondholders. 

This paper examines the capital market impacts of CEO podcasts-an emerging but informal communication channel. We distinguish episodes where CEOs are discussed from those where CEOs appear in-person as interview guests. CEO podcasts elicit significant market responses, including increased trading activity and abnormal returns, particularly among retail investors. However, CEO-interview podcasts generate stronger effects than mentions, likely due to their perceived intentionality and potential to foster para-social relationships. We also document heightened investor attention-measured via Wikipedia searches-especially for CEOs following interview episodes. Notably, CEO-interview podcasts following negative earnings announcements are associated with significant return reversals, suggesting they may influence perceptions through a more personal and conversational tone. Consistent with this, content analysis shows these podcasts are more positive and subjective, and less complex than corresponding earnings call transcripts. Our findings suggest that podcasts, though unconventional and potentially non-compliant with disclosure regulations, serve as an impactful medium through which CEOs can shape narratives, engage investors, and potentially soften the market's response to bad news.

We examine the simultaneous peer effects of co-workers, family, and neighbors in financialbehavior using Danish registry data. We find that neighbors exert the strongest influence, followed by co-workers and family members. Peer effects are stronger for stocks than for mutual funds, and among experienced investors. While co-workers primarily influence buying decisions, neighbors affect both buying and selling, suggesting distinct channels of influence across peer groups. A multi-layer network model formalizes our empirical results, showing that an investor's trading activity depends on her centrality within and across network layers. Our findings provide new insights into the drivers and implications of peer effects in financial markets.

We unveil asset managers' social media communications as a distinct new channel for attracting flows of money to mutual funds. Combining a database of more than 1.6 million posts on X/Twitter by U.S. mutual fund families with textual analysis, we find that flows of money to mutual funds respond positively to both the number and tone of the posts. While the link between social media communications and flows of money is not explained by conventional marketing efforts, our findings suggest that the social media channel is not independent from asset management companies' broader marketing strategies. A high-frequency analysis that exploits intraday ETF trade data allows us to isolate the effect of tweets on investor decisions from potential confounders. We then consider and test four different economic mechanisms. The results of these tests do not support the hypothesis that asset managers' social media communications reduce search costs for potential investors. The results do not support, either, that asset management companies' Twitter activity increases investor attention or alleviates information asymmetries by communicating performance-relevant information to investors. In contrast, our evidence suggests that asset managers use social media as an effective persuasion tool.

Audit firms and regulators have both commented extensively on the potential for new sources of data to transform the audit process. Focusing on auditors' going-concern opinions, we use deep learning to measure the "bearishness" of posts on social media and find it strongly predicts the likelihood of firm failure. This association is incremental to other market-based signals, such as a firm's default likelihood or short interest. Interestingly, this signal appears largely orthogonal to an auditor's going-concern opinion, implying that social media predicts future events that precipitate failure not fully considered by auditors. While we fail to observe a direct association between bearishness and going concern opinions, our evidence does suggest that going concern accuracy improves with bearishness. Finally, we consider potential channels for these results and find that bearishness foreshadows difficulties in raising capital, predicting the likelihood of future credit downgrades and equity issuances. Our evidence should be informative to regulators and audit firms, both of whom are currently evaluating the usefulness of "new" data to auditors.

This article examines the 2022 South Korean bond market crisis triggered by Heungkuk Life Insurance's decision not to exercise a call option on its perpetual bonds. Although the decision was legally sound and financially rational, markets interpreted it as a betrayal of an unwritten convention, triggering a sharp collapse in bond prices and forcing a rapid capitulation. We analyze this episode through the concept of narrative performativity, highlighting how market narratives do not merely interpret information but actively constitute market reality by disciplining actors and enforcing conformity. Drawing on theories of performativity from speech act philosophy, economic sociology, and anthropological studies of mythology, we show how narratives acquire material force in shaping financial outcomes. The Heungkuk case reveals that financial markets function less as transparent information-processing devices than as arenas of myth, ritual, and power, where collective narratives are continually verified and ritually reaffirmed. Understanding financial markets in this way underscores that belief, narrative authority, and symbolic efficacy are not peripheral but central forces shaping contemporary finance.

This study investigates the formation and economic consequences of "echo chambers" within sell-side analysts' information networks. Departing from the view of analysts as independent agents, we construct a novel multilayer network that integrates three distinct channels of professional interaction: team cooperation, intra-firm affiliation, and stock co-coverage. We aggregate these layers using an optimization procedure that recovers their relative importance in shaping belief similarity, and then apply community detection to identify tightly-knit analyst cliques. We document that these cliques are structurally persistent and function as potent echo chambers: analysts within the same clique exhibit significant convergence in their forecast biases and optimism, an effect distinct from strategic herding. We also find that firms covered by a greater number of distinct cliques experience a deteriorated information environment, manifested as higher forecast dispersion and increased stock price crash risk. Our findings highlight that the social structure of information intermediaries can foster insular belief systems, with significant negative externalities for market efficiency.

The 2021 surge of "meme stocks" such as GameStop and AMC show how social media platforms, particularly Reddit and Tiktok, could mobilize a new generation of investors and disrupt traditional market dynamics. This study explores the influence of Generation Z investors on meme stock volatility. It combines a case study of GameStop and AMC trading activity with a survey of high school and early college investors. Price and volume data were compared with social media discussion trends. It was revealed that there is a strong positive correlation between social media activity and heightened market volatility. Survey responses further show that behavioral finance patterns like: fear of missing out (FOMO), herd mentality, and the hope to win big, all help drive Gen Z traders to make these trading decisions. This suggests that Gen Z investors, when fueled by online communities and emotions, represent a disruptive force in financial markets. Their behavior starts to make the division between investing and social movements unclear. As Gen Z's financial power continues to expand their influence on market volatility will continue to grow.