Finance

- June 2026
- Article
Primary Capital Market Transactions and Index Funds

By: Chris Murray and Marco Sammon

We document the effects of mechanical buying by CRSP-index-tracking funds on post-IPO returns and IPO deal structure. Leveraging a difference-in-differences-style design built on a 2017 CRSP rule change, we find that expected index fund demand leads fast track IPOs to outperform non-fast track IPOs by 15 percentage points shortly after the IPO, although this outperformance largely reverts within six months. Further, fast track IPOs are priced higher and are more likely to be upsized, raising 7.7% more capital than similar non fast track stocks, evidence that expected passive buying has real implications for firms raising capital in public markets.
- June 2026
- Article
Primary Capital Market Transactions and Index Funds

By: Chris Murray and Marco Sammon

We document the effects of mechanical buying by CRSP-index-tracking funds on post-IPO returns and IPO deal structure. Leveraging a difference-in-differences-style design built on a 2017 CRSP rule change, we find that expected index fund demand leads fast track IPOs to outperform non-fast track IPOs by 15 percentage points shortly after the IPO,...
- June 2026
- Article
Consumer Choice and Corporate Bankruptcy

By: Samuel Antill and Megan Hunter

We estimate the indirect costs of corporate bankruptcy associated with lost customers. In incentivized experiments, randomly informing consumers about a firm’s Chapter 11 reorganization lowers their willingness to pay for the firm’s products by 17%-28%. Consumers worry that bankruptcy could reduce product quality or prevent future interactions with the bankrupt firm. On average, 38% of consumers are aware of major bankruptcies. Using our experiments to estimate a structural model, we show that these indirect costs of bankruptcy amount to 12%-15% of a firm's value. We show that these costs are unlikely to arise before bankruptcy.
- June 2026
- Article
Consumer Choice and Corporate Bankruptcy

By: Samuel Antill and Megan Hunter

We estimate the indirect costs of corporate bankruptcy associated with lost customers. In incentivized experiments, randomly informing consumers about a firm’s Chapter 11 reorganization lowers their willingness to pay for the firm’s products by 17%-28%. Consumers worry that bankruptcy could reduce product quality or prevent future interactions...
- June 2026
- Article
Pricing of Climate Risk Insurance: Regulation and Cross-Subsidies

By: Ishita Sen, Ana-Maria Tenekedjieva and Sangmin Oh

We study the pricing of homeowners’ insurance, a $15 trillion market essential for hedging climate-related losses. We show that insurance premiums are subject to starkly different regulations across states, creating persistent cross-subsidies and price distortions. We employ states’ regulatory rules in an instrumental variable estimation and a border discontinuity design to show insurers do not adjust rates in highly-regulated states and compensate by raising rates in less-regulated states. Rates and risks diverge in the long-run, distorting cross-state risk-sharing and increasing insurer exits from highly-regulated states. We argue these patterns stem from the interactions between rate regulation and insurers' financing constraints.
- June 2026
- Article
Pricing of Climate Risk Insurance: Regulation and Cross-Subsidies

By: Ishita Sen, Ana-Maria Tenekedjieva and Sangmin Oh

We study the pricing of homeowners’ insurance, a $15 trillion market essential for hedging climate-related losses. We show that insurance premiums are subject to starkly different regulations across states, creating persistent cross-subsidies and price distortions. We employ states’ regulatory rules in an instrumental variable estimation and a...

About the Unit

Our strategy is to assemble and nurture a faculty whose interests and skills complement each other, and who work well together:

a) to produce a broad range of finance-related research that is published in top-tier scientific and practitioner journals, and that addresses issues of present and future importance to managers (including regulators and policy makers);

b) to develop highly-relevant and intellectually rigorous MBA and executive education courses; and

c) to mentor future academics through the Business Economics doctoral program.

Our applied focus and access to business organizations are major advantages which are reinforced by our students and our case-based approach. We have a faculty with broad expertise, and we have resources, field contacts, and institutional support, all of which we can leverage to do richer work and be more productive than we could at other institutions.

Recent Publications

Primary Capital Market Transactions and Index Funds

By: Chris Murray and Marco Sammon

June 2026 |
Article |
Review of Asset Pricing Studies

We document the effects of mechanical buying by CRSP-index-tracking funds on post-IPO returns and IPO deal structure. Leveraging a difference-in-differences-style design built on a 2017 CRSP rule change, we find that expected index fund demand leads fast track IPOs to outperform non-fast track IPOs by 15 percentage points shortly after the IPO, although this outperformance largely reverts within six months. Further, fast track IPOs are priced higher and are more likely to be upsized, raising 7.7% more capital than similar non fast track stocks, evidence that expected passive buying has real implications for firms raising capital in public markets.

Keywords: Initial Public Offering; Investment; Financial Markets

Citation

Find at Harvard

Purchase

Consumer Choice and Corporate Bankruptcy

By: Samuel Antill and Megan Hunter

June 2026 |
Article |
Journal of Finance

We estimate the indirect costs of corporate bankruptcy associated with lost customers. In incentivized experiments, randomly informing consumers about a firm’s Chapter 11 reorganization lowers their willingness to pay for the firm’s products by 17%-28%. Consumers worry that bankruptcy could reduce product quality or prevent future interactions with the bankrupt firm. On average, 38% of consumers are aware of major bankruptcies. Using our experiments to estimate a structural model, we show that these indirect costs of bankruptcy amount to 12%-15% of a firm's value. We show that these costs are unlikely to arise before bankruptcy.

Keywords: Consumer Choice; Bankruptcy; Financial Distress; Structural Estimation; Experimental Economics; Hertz; Insolvency and Bankruptcy; Perception; Consumer Behavior

Citation

Find at Harvard

Purchase

Pricing of Climate Risk Insurance: Regulation and Cross-Subsidies

By: Ishita Sen, Ana-Maria Tenekedjieva and Sangmin Oh

June 2026 |
Article |
Journal of Finance

We study the pricing of homeowners’ insurance, a $15 trillion market essential for hedging climate-related losses. We show that insurance premiums are subject to starkly different regulations across states, creating persistent cross-subsidies and price distortions. We employ states’ regulatory rules in an instrumental variable estimation and a border discontinuity design to show insurers do not adjust rates in highly-regulated states and compensate by raising rates in less-regulated states. Rates and risks diverge in the long-run, distorting cross-state risk-sharing and increasing insurer exits from highly-regulated states. We argue these patterns stem from the interactions between rate regulation and insurers' financing constraints.

Keywords: Climate Risk; Homeowners' Insurance; Price Controls; Financial Regulation; Cross-subsidization; Climate Change; Price; Risk and Uncertainty; Geographic Location; Insurance Industry; United States

Social Finance: Driving Accountability

By: Robin Greenwood, Richard S. Ruback and Elysee Barakett

May 2026 |
Teaching Note |
Faculty Research

Teaching Note for HBS Case No. 224-043.

Citation

Educators

River Remedy: Navigating Mississippi's Medical Marijuana Market

By: Robin Greenwood and Richard S. Ruback

May 2026 |
Teaching Plan |
Faculty Research

Teaching Plan for HBS Case No. 225-011.

Citation

Educators

Passive Flows and the Limits to Arbitrage

By: Yao Deng and Marco Sammon

2026 |
Working Paper |
Faculty Research

We show that passive flow-induced trading acts as a limit to arbitrage: accounting-based long-short anomaly strategies earn significantly lower realized returns among stocks that experience larger passive inflows during the holding period. The mechanism is that inelastic demand from index-fund flows has a larger price impact on short-leg stocks, where demand multipliers are larger on average. Thus, even though the long and short legs have similar levels of passive flow-induced trading, passive inflows raise short-leg stock returns by more during the holding period, compressing long-short return spreads. We provide evidence that one channel for the higher short-leg multipliers is short covering: among heavily shorted stocks, passive-flow shocks are followed by larger declines in short interest.

Keywords: Investment

Citation

Optimal Index-Linked Rebalancing with Anticipatory Trading

By: Stefano Pegoraro, Marco Sammon and John J. Shim

2026 |
Working Paper |
Faculty Research

We develop a model of index-linked rebalancing around reconstitution events. Index trackers trade off execution costs against tracking-error concerns, while speculators maximize profits given expected index-linked demand. The model shows speculators effectively act as liquidity providers at index reconstitution, and trading costs decline as speculator competition increases. With enough competition, even loose index trackers optimally rebalance at index reconstitution. The model rationalizes concentrated reconstitution-day trading with little contemporaneous price impact: speculators' pre-positioning shifts price pressure away from the reconstitution date. We estimate that avoidable rebalancing costs borne by index-linked investors are small relative to more general price impact estimates from the literature. We argue that apparent front-running reflects competitive liquidity provision and benefits index investors.

Keywords: Investment Funds; Investment Return

Citation