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The Effect of War Risk on Managerial and Investor Behavior: Evidence from the Brussels Stock Exchange in the Pre-1914 Era
In: The journal of economic history, Volume 80, Issue 3, p. 629-669
ISSN: 1471-6372
With two news-based measures on war, I document that managers mitigated war risk through dividend cuts, arguably to establish a war chest. Moreover, I find that companies postponed their initial public offerings and that foreign companies were more likely to delist after the onset of wars. Investors reacted negatively to the increase in war news coverage. There is evidence of mean-reversion after a threat of war and a negative drift following the start of war. Finally, I highlight the importance of proximity to military conflicts. In general, the evidence indicates that both managers and investors became more risk averse as a consequence of war news.
The Effect of War Risk on Managerial and Investor Behavior: Evidence From the Brussels Stock Exchange in the Pre-1914 Era
In: The Journal of Economic History, Forthcoming
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Working paper
Banking on innovation: Listed and non-listed equity investing, evidence from société générale de Belgique, 1850–1934
In: Explorations in economic history: EEH, Volume 93, p. 101593
ISSN: 0014-4983
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Go active or stay passive: Investment trust, financial innovation and diversification in Belgium's early days
In: Explorations in economic history: EEH, Volume 79, p. 101378
ISSN: 0014-4983
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Scuttle for shelter: flight-to-safety and political uncertainty during the Spanish Second Republic
In: European review of economic history: EREH, Volume 26, Issue 3, p. 423-447
ISSN: 1474-0044
Abstract
The Spanish Second Republic was a unique experiment of democratization in interwar Europe, which was characterized by extreme levels of political uncertainty. We find that investors responded to shifts in uncertainty by selling stocks in favor of government bonds—a behavior known as flight-to-safety. Additionally, we find that political uncertainty caused stock market stress and induced significant differences in the cross-section of expected stock returns, consistent with the exposures to political uncertainty. The fact that investors recurrently scuttled to shelter into government bonds suggests that they did not perceive a radical change in the political regime as an immediate and credible threat.
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Working paper
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