Financial Management Association International

10/08/2026

Financial Management article "Residual-Risk Concentration and the Reliability of Value-Weighted Portfolio Returns" by Chanho Yee (Economic Research Institute) is now available in Early View.

Abstract:
Value-weighted factor portfolios can hold more than a thousand stocks yet remain exposed to firm-specific risk through only a few. I measure this concentration with residual-risk breadth, the effective number of firms contributing to return variation unexplained by standard equity factors. Across 70 anomaly portfolios from 1980 to 2024, median breadth falls from 12.7 to 4.0 while the stock count remains above 1000. Weight concentration explains about 41% of the decline; much of the remainder reflects erosion of a historical diversification advantage associated with lower residual variance among larger firms. Recent factor returns are consequently more sensitive to a few companies. A 10% constituent cap raises recent breadth by 81%, reduces the upper tail of residual returns by 14%, and lowers the median within-predictor alpha standard error by 13% without increasing drift-adjusted rebalancing turnover. The evidence points to declining reliability of realized value-weighted factor returns.

🔗 Read the article:

10/08/2026

📣 Submit your paper today for the 2027 Consortium on Asset Management!

📌 This Consortium is designed for those are currently working on research in asset management and related topics. Priority will be given to researchers who have received their doctorates within the last five years and with at least one co-author based in Europe-based schools. Criteria will include the nature of the research problem, the implications of the proposed research, the quality of the research design, and the expected contribution of the research to the literature.

➡️ The Consortium will be held on 15 April at St. John’s College, University of Cambridge in Cambridge, England.

🗓️ The deadline to submit your paper is 1 November 2026.

🔗 Learn more and submit your paper today:

This Consortium is designed for those are currently working on research in asset management and related topics. Priority will be given to researchers who have received their doctorates within the last five years and with at least one co-author based in Europe-based schools. Criteria will include the...

10/07/2026

The 7th and final article in the FM Fall 2026 (Volume 55, Issue 3) issue is "Green Bond Issuance Effect on Environmental and Social Performance: Evidence From an International Sample" by Francesca Battaglia, Paolo Fiorillo, Lavinia Rognone , and Dario Salerno.

Abstract:
We study how first-time green bond (GB) issuances impact the environmental and social performance (ESP) of issuers. If GB issuances signal the issuer's commitment to sustainable development, rating agencies should positively adjust ESG scores, assuming no opportunistic behavior or rating inefficiencies. Using a global GB issuance dataset, we employ a difference-in-differences approach to compare ESP scores of GB issuers (treatment group) with those of non-GB issuers (control group). Compared to non-GB issuers, GB issuers experience enhanced ESP after their first GB issuance, with stronger results for firms with lower ESG scores pre-issuance. Higher environmental performance is driven by reduced carbon emissions, while improved social performance is driven by better workforce, human rights, and community scores. GB issuances reduce firms’ likelihood of ESG controversies. These findings contribute to our understanding of the factors driving the GB–ESG nexus and have implications for policymakers, investors, and issuers interested in integrating or promoting sustainability practices.

🔗 Read the full article: https://onlinelibrary.wiley.com/doi/abs/10.1111/fima.70015

10/06/2026

The 6th article in the FM Fall 2026 (Volume 55, Issue 3) issue is "The Role of Index Fund Ownership in the Era of Say-on-Pay" by Kiseo Chung (Texas Tech University) and Hwanki Brian Kim (Baylor University).

Abstract:
We examine whether and how index funds influence executive compensation in the post-Say-on-Pay era. Using the annual reconstitution of the Russell indexes as a source of exogenous variation in index fund ownership, we document a causal effect of index ownership on CEO pay structure. Firms with greater index ownership adopt more performance-vesting and equity-based compensation, consistent with preferences expressed by institutional investors and proxy advisors. These effects emerge only after the implementation of the Say-on-Pay rule, suggesting a voting-enabled mechanism. Further analysis reveals that index funds are more likely to vote in line with Institutional Shareholder Services, particularly when pay practices are problematic, and that failed Say-on-Pay votes lead to revisions in compensation structure. We also find stronger pay-for-performance sensitivity following index ownership shocks. Our findings highlight a scalable governance channel through which index funds, despite their passive mandates, actively shape executive incentives via proxy voting.

🔗 Read the full article: https://onlinelibrary.wiley.com/doi/10.1111/fima.70066

10/05/2026

The fifth article in the FM Fall 2026 (Volume 55, Issue 3) issue is "Mergers and Acquisitions as Navigators of Climate Policy Shocks: Evidence from the NOx Budget Trading Program" by Samer Adra, Yang Gao, Malika Hamadi, and Jiayi Yuan.

Abstract:
We examine how mergers and acquisitions (M&As) enable firms to adapt to climate policy shocks. Exploiting the adoption of the Nitrogen Oxides (NOx) Budget Trading Program (NBP) across US states as an exogenous shock, we find that firms with NOx-emitting plants subject to the NBP are more likely to engage in M&As, particularly through vertical integration. The effect is stronger among firms facing larger compliance cost increases, supporting the view that heightened regulatory burdens drive post-NBP acquisitions. Consistent with the cost-saving role of vertical integration, we show that NBP-induced vertical deals reduce production and distribution costs. Overall, our findings provide evidence that M&As serve as a rational response to climate regulation, revisiting the neoclassical view of acquisition motives in the context of environmental policy.

🔗 Read the full article: https://onlinelibrary.wiley.com/doi/full/10.1111/fima.70014

10/02/2026

The fourth article in the FM Fall 2026 (Volume 55, Issue 3) issue is "First-Mover Advantage Among Direct Investors Holding Overlapping Positions and the Regulation of Mutual Funds" by Christof W. Stahel (Investment Company Institute).

Abstract:
Accelerating mutual fund outflows following poor past performance have been attributed to an investor first-mover advantage inherent in mutual fund structure. We show that direct investors, who hold very similar portfolio assets through a common separately managed account strategy, exhibit similar behavior following poor portfolio returns, but their behavior is driven by a first-mover advantage at the asset level, reflecting competition for limited market liquidity and concerns about depressed asset values. Benchmarking mutual fund investor behavior with that of direct investors in matched separately managed accounts, we find no evidence that poor fund performance accelerates fund outflows. These results have important implications for our understanding and regulation of the mutual fund industry.

🔗 Read the full article: https://onlinelibrary.wiley.com/doi/abs/10.1111/fima.70012

09/30/2026

The third article in the FM Fall 2026 (Volume 55, Issue 3) issue is "Media Climate Change Concern and Stock Returns" by Liya Chu (Xi'an Jiaotong University), Xinrui Duan (Shenzhen University), Jun Tu (Shanghai Jiao Tong University), and Luying Wang (Huazhong University of Science and Technology).

Abstract:
This study introduces a media climate change concern index, derived from unexpected climate change coverage across diverse media channels, including print (newspapers), voice (radio), and video (television). The index negatively predicts aggregate stock market returns, both in-sample and out-of-sample, offering potential gains for investors. Our findings emphasize the media's influence on market returns through climate change discussions, mainly via the cash-flow channel. This reveals possible shifts in product demand, while demand for green or brown stocks may not be altered as expected, possibly due to “greenwashing” by institutional investors exaggerating their environmental commitments.

🔗 Read the full article: https://onlinelibrary.wiley.com/doi/abs/10.1111/fima.70011

09/29/2026

The second article in the FM Fall 2026 (Volume 55, Issue 3) issue is "Speed Bump and Stock Market Quality: Evidence From NYSE American" by Bo Liu (Huron University College) and Ke Xu (University of Victoria).

Abstract:
Should trading speed of high-frequency traders be regulated? Using the data from the New York Stock Exchange American, this paper examines the impact of a speed bump on market liquidity and price discovery. Our results indicate that the use of a speed bump can lower the costs of adverse selection through reducing informed trading. However, it also has a negative effect on price discovery, as trading activities slow down. The speed bump policy is a double-edged sword that improves liquidity but reduces price discovery.

🔗 Read the full article: https://onlinelibrary.wiley.com/doi/full/10.1111/fima.70010

09/24/2026

The first article in the FM Fall 2026 (Volume 55, Issue 3) issue is "When Losers Talk: Information Diffusion, Social Norms, and Conversations of Investors" by YoungJae (Jay) Choi (University of North Dakota).

Abstract:
Conversations are vessels through which information travels. To understand how investment information spreads via person-to-person conversations, I observe paired investors in a well-controlled experiment. While self-enhancement bias suggests that investors are more likely to discuss their performance when they have positive returns, I find the reverse: in conversations, investors with positive returns appear less likely to talk about their investment outcome. Experimental transcripts highlight conversational norms as a key mechanism. For example, though sharing information about one's positive performance may feel good, it may also have a negative effect on the listener, and making one's counterpart feel bad is often considered socially inappropriate. Thus, in the experiment, investors with positive returns are reluctant to discuss their performance if they are uncertain about their conversation partner's return, or if they learn it is negative. These results show that conversational norms shape the diffusion of investment information.

🔗 Read the full article: https://onlinelibrary.wiley.com/doi/abs/10.1111/fima.70008

09/22/2026

🚨 Check your inbox! The Fall 2026 (Volume 55, Issue 3) issue of Financial Management is now available.

🔗 View the issue: https://onlinelibrary.wiley.com/toc/1755053x/2026/55/3