Contagion Effects of Equity Financing Announcements Within Business Groups
Douglas J. Cumming | Sanchit Jain | Varun Jindal
We examine whether announcements of financing decisions by group-affiliated firms have any spillover effects on the value of their member firms. Employing data on rights offerings, private placements of equity, and follow-on public offerings by group-affiliated firms in India, we find that a positive (negative) market reaction to the announcement of a financing decision by a group-affiliated firm also leads to a positive (negative) market reaction for non-event firms within the same business group. Further, this contagion effect is stronger for the group’s leading firms, firms that announce relatively large issues of equity, and financially constrained firms. Our results are robust to several checks as well as alternative measures of our main variables of interest.
Fog to Pyre: The Impact of Supreme Court Judgment Complexity on Dowry Deaths
Abhinav Anand | Sanchit Jain | Sheetal Sekhri | Jalaj Pathak
We use Natural Language Processing (NLP) techniques to examine if judgments’ complexity in Supreme Court cases influences dowry deaths in India. Leveraging the quasi-random assignment of judges to cases, we find that a one-unit increase in the complexity of judgments captured by the Fog Index in a state year increases dowry deaths by 2% in the subsequent period. Based on estimates of the Value of Statistical Life (VSL), this increase in dowry-related homicides of women costs $1.83 million in a state year or 51 million USD for the country annually. In otherwise similar judgments, very high complexity increases the incidence of future dowry deaths by 15%. However, having women justices on the panel of judges in such cases mitigates the effect of higher complexity.
Energy-Related Discussion and Its Impact on the U.S. Financial Markets
Brian M. Lucey | Sanchit Jain | Alok Dixit | Jalaj Pathak
This study investigates whether financial markets price the uncertainty surrounding the Fed speeches encompassing energy-related discussions. We attempt to quantify select aspects of the energy-related discussion in Fed speeches, and examine their impact on important financial market variables, namely, the equity risk premium (ERP) and volatility. The results provide evidence that the proportion of energy-related discussion in the Fed speeches positively affects ERP and index volatility. Furthermore, we show that the Dovishness of such discussions alleviates the uncertainty caused by energy-related concerns, and in turn, reduces the next day volatility. This underscores the importance of energy-related discussion in Fed speeches, and suggests that the US financial market requires a compensation for the uncertainty caused by such discussions.