Access to Finance Blog

Corporate Finance in China

China will soon become the largest economy in the world, but many Westerners (myself included) know very little about it. I’ve thus tried to educate myself about the Chinese economy, and earlier posted introductions to corporate governance in China and capital markets in China. This post is an introduction to corporate finance in China – capital structure, corporate investment, …

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How Macroeconomic Conditions Affect Stock Prices

John Cochrane of Stanford has written an excellent review of recent advances and future research directions in macro-finance. Macro finance studies the relationships between asset prices (e.g. the level of the stock market) and economic conditions (e.g. whether we’re in a recession or a boom). These relationships are important. For example, if investors are more …

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A Layman’s Guide to Separating Causation from Correlation … and Noticing When Claims of Causality are Invalid

Imagine you’re the Minister for Education, deciding how large to make a school district. Smaller school districts offer parents more school choice. For example, in Boston, there are 70 school districts within a 30-minute commute of the downtown area, so parents with a job in downton Boston have 70 districts they can live in and …

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How Proxy Advisors Influence Voting Outcomes

Proxy advisors are playing an increasingly influential role in corporate governance, by providing investors with guidance on how to vote in director elections or for a manager- or shareholder-sponsored proposal (e.g. on corporate social responsibility or payout policy). Their influence is growing, in part, due to the rapid rise in index funds – since they …

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The UK’s Brexit Options

The UK voted for Brexit last June, but what does Brexit actually mean? The UK can pursue various options: staying in the Single Market, staying in the Customs Union, or forming a Free Trade Area. These are often used interchangeably as various forms of a “soft Brexit”, but there are important distinctions between them. The …

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CEOs Cut Investment To Sell Their Own Shares At High Prices

One of the most fundamental concerns with corporations is that they focus on short-term profit rather than investing for the long-term. This is a particular concern in the 21st century, where innovation is particularly critical for competitive success. Moreover, allegations of short-termism have serious social repercussions. Long-term investments, such as reducing carbon emissions, developing blockbuster drugs, or …

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