Will being born or living through the present financial and economic crisis affect your future decision making? Recent work by Ulrike Malmendier and her co-authors suggests that experiences of macroeconomic instability and depression make individuals less willing to take financial risks in the future - click here. In addition, they find that corporations managed by executives who grew up during the Great Depression were less likely to rely on debt finance and more likely to use internal finance – click here for the paper.
Daron Acemoglu, Simon Johnson, Amir Kermani, James Kwak and Todd Mitton have written a paper on whether firms connected to Timothy Geithner benefited from these connections. They do so by looking at how stocks of these firms reacted to the announcement that he was a nominee for Treasury Secretary in November 2008. They find that there were large abnormal returns for connected firms. Below is the paper's abstract and the full paper is available here . The announcement of Timothy Geithner as nominee for Treasury Secretary in November 2008 produced a cumulative abnormal return for financial firms with which he had a connection. This return was about 6% after the first full day of trading and about 12% after ten trading days. There were subsequently abnormal negative returns for connected firms when news broke that Geithner's confirmation might be derailed by tax issues. Excess returns for connected firms may reflect the perceived impact of relying on the advice of a small ne