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  5. New Topics in Corporate Investment
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New Topics in Corporate Investment

Paper Session

Sunday, Jan. 4, 2026 8:00 AM - 10:00 AM (EST)

Loews Philadelphia Hotel, Regency Ballroom C2
Hosted By: American Finance Association
  • Nicolas Crouzet, Northwestern University

Go with the Flow: Debt Structure Changes and Monetary Policy Transmission

Chuck Fang
,
Drexel University
Greg Nini
,
Drexel University

Abstract

Fixed-income mutual fund flows have become a key determinant of corporate debt structure. When loan funds receive more inflows than bond funds, firms cater by shifting toward floating-rate loans over fixed-rate bonds. Using fund flows as an instrument, we show that the exposure to floating-rate debt has a much larger effect on firm sensitivity to monetary policy than previous OLS estimates, accounting for about \$1 trillion reduction in capital expenditures during the 2022-23 tightening cycle. We find evidence in support of the financial accelerator mechanisms, particularly the effect of interest coverage constraints.

Data as a Networked Asset

Bo Bian
,
University of British Columbia
Qiushi Huang
,
Shanghai Advanced Institute of Finance
Ye Li
,
University of Washington
Huan Tang
,
University of Pennsylvania

Abstract

Data is non-rival: a firm’s customer data informs other firms about their customers. We uncover a network of inter-firm data conduits embedded in mobile applications. Data sharing induces comovement in firms’ operational, financial, and stock-market performances, propagates shocks (e.g., cyberattacks), and induces herding in product design. Apple’s privacy policy—a shock to inter-firm data flows—weakened these patterns. We develop a dynamic network model, where firms’ performance and growth are interconnected through a data-sharing network. A network-augmented Gordon growth formula emerges for valuing data-generated cash flows. Our valuation metrics incorporate high-order and long-term spillovers and reveal systemically important firms.

The Real Cost of Benchmarking

Christian Kontz
,
Stanford University
Sebastian Hanson
,
Stanford University

Abstract

Benchmark-linked capital flows increase firms' CAPM βs, thereby raising managers' perceived cost of equity and reducing investment. Using exogenous variation from Russell and S&P 500 reconstitutions, we show that inclusion in a benchmark stock index increases a stock's CAPM β. Managers interpret the higher β as a higher cost of equity and reduce investment. Consistent with this mechanism, benchmark inclusion also raises the perceived cost of equity among stock analysts and regulators. Industries with larger increases in βs due to benchmarking have accumulated less capital over the past two decades. Benchmark-induced changes in the cross-section of CAPM βs do not cancel out but affect aggregate investment because higher βs fall on many firms with high investment elasticities, while lower βs benefit a few large but inelastic firms. This mechanism can account for the majority of the missing investment puzzle.

Discussant(s)
Olivier Darmouni
,
Columbia University
Bernard Herskovic
,
University of California-Los Angeles
Thummim Cho
,
Korea University
JEL Classifications
  • G3 - Corporate Finance and Governance