More from these Authors

• Article | Journal of Financial Economics | 2013

  Learning and the Disappearing Association Between Governance and Returns

  Lucian A. Bebchuk, Alma Cohen and Charles CY Wang

  The correlation between governance indices and abnormal returns documented for 1990–1999 subsequently disappeared. The correlation and its disappearance are both due to market participants' gradually learning to appreciate the difference between good-governance and poor-governance firms. Consistent with learning, the correlation's disappearance was associated with increases in market participants' attention to governance; market participants and security analysts were, until the beginning of the 2000s but not subsequently, more positively surprised by the earning announcements of good-governance firms; and, although governance indices no longer generated abnormal returns during the 2000s, their negative association with firm value and operating performance persisted.

  Keywords: Corporate Governance; Investment Return; Operations; Performance; Value; Learning; Business Earnings; Behavioral Finance;

  Citation:

  Bebchuk, Lucian A., Alma Cohen, and Charles CY Wang. "Learning and the Disappearing Association Between Governance and Returns." Journal of Financial Economics 108, no. 2 (2013): 323–348.

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• Editorial | Annals of Internal Medicine | April 2, 2013

  Getting the Most Out of Financial Incentives for Weight Loss

  Jason Riis

  Citation:

  Riis, Jason. "Getting the Most Out of Financial Incentives for Weight Loss." Annals of Internal Medicine 158, no. 7 (April 2, 2013): 560–561.

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• Article | Journal of Economic Perspectives | Spring 2013

  The Investment Strategies of Sovereign Wealth Funds

  Shai Bernstein, Josh Lerner and Antoinette Schoar

  This paper examines the direct private equity investment strategies across sovereign wealth funds (SWFs) and their relationship to the funds' organizational structures. SWFs seem to engage in a form of trend chasing, since they are more likely to invest at home when domestic equity prices are higher and invest abroad when foreign prices are higher. Funds see the industry P/E ratios of their home investments drop in the year after the investment, while they have a positive change in the year after their investments abroad. SWFs where politicians are involved have a much greater likelihood of investing at home than those where external managers are involved. At the same time, SWFs with external managers tend to invest in lower P/E industries, which see an increase in the P/E ratios in the year after the investment. By way of contrast, funds with politicians involved invest in higher P/E industries, which have a negative valuation change in the year after the investment.

  Citation:

  Bernstein, Shai, Josh Lerner, and Antoinette Schoar. "The Investment Strategies of Sovereign Wealth Funds." Journal of Economic Perspectives 27, no. 2 (Spring 2013): 219–238.

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