Maryam Fathollahi

Theory predicts that horizontal acquisitions can effectively increase incumbent firms' market power in concentrated industries with high product similarity. Using a novel measure for industry product similarity, we show that in such industries firms' propensity to make horizontal acquisitions is greater and that the acquisitions result in more positive announcement returns for the acquirer and rival firms and in a larger premium paid for the target. Also, the deals harm dependent customer and supplier firms and they are more likely to be challenged by antitrust authorities. Overall, by emphasizing the importance of product similarity, our results help explain mixed empirical findings on whether horizontal acquisitions are used to reduce competition intensity.

We examine how employee flight risk, the risk that a firm will suffer productivity losses and incur significant search and training costs when some of its mobile workers leave, affects capital structure decisions. We proxy for this risk with the ex-ante cross-industry labor mobility of a firm's workers using a novel dynamic textual measure for this mobility derived from network centrality. The results from a battery of tests validate the use of our measure. To alleviate omitted variable and functional form bias concerns, we report estimates using the double machine learning (DML) estimator. Higher employee flight risk compels firms to adopt more conservative capital structures. This effect is stronger for firms with limited access to external capital, that are in labor-intensive industries, or with a larger number of workers who are skilled or in managerial occupations. Conversely, the effect is weaker for firms in strongly performing industries and after exogenous increases in the supply of labor or workers' costs of switching employers. Our evidence implies that employee flight risk, which can be especially acute during financial distress, leads to more cautious financial choices because it increases a firm's expected costs of financial distress.

HEC Montréal · Louisiana State University · Southern Methodist University · University of Oklahoma · University of Arkansas · University of Delaware · University of Missouri · University of Arizona · Southern Finance Association · Financial Management Association · Eastern Finance Association

AI in Finance Conference, University of Maryland (2026) · University of Oklahoma · Oklahoma State University · University of Alabama · University of Piraeus

We study the impact of robot adoption on public finance outcomes for local U.S. governments by instrumenting for this adoption with European industry data on robot adoptions from countries that are ahead of the U.S. in terms of robot adoption, thereby avoiding concerns of local factors in the U.S. driving both robot adoption and outcome variables. A one-standard deviation increase in robot adoption is associated with municipal borrowing costs that are about 8 basis points higher, which leads to annual additional financing costs for municipalities of $2.2 million. Further, robot adoptions reduce municipalities' bond ratings. Our results are more pronounced in municipalities with industries in which humans are more likely to be replaced by robots and where municipalities are less creditworthy. Also, our findings are driven by drops in all the sources of own tax revenues, including property, sales, and income taxes. Transfers from the state and federal governments and municipal reductions in major expenditures cannot offset this revenue drop and prevent creditworthiness deteriorations from the declines in employment and wages due to robot adoption.

IÉSEG School of Management · University of North Dakota · University of Oklahoma · University of Arizona (Finance and MIS) · University of Arkansas · University of North Texas

We resolve a longstanding puzzle in corporate risk management by showing that hedging reallocates risk rather than reducing it overall. Firms face binding risk capacity constraints arising from debt covenants, stakeholder tolerance, and organizational complexity. Financial hedging does not expand this capacity but reallocates variance within it. By hedging financial risks, firms free up risk capacity that they redeploy toward operational and strategic risks where they possess comparative advantage.