Research Page
Most of my research papers that I am circulating are downloadable at my SSRN page: http://papers.ssrn.com/sol3/cf_dev/AbsByAuth.cfm?per_id=234044.
List of publications (SSRN links are to pre-publication versions):
SSRN PDF Alexander W. Butler, Larry Fauver, and Sandra Mortal, "Corruption, Political Connections, and Municipal Finance," Review of Financial Studies, forthcoming.
Corruption is a component of default risk that is priced in the yield issuers pay on their municipal debt. We also identify a channel through which political connectedness affects the security issuance process.
Winner of the award for Best Fixed Income paper at the 2007 FMA meetings.
SSRN PDF Alexander W. Butler, "Distance Still Matters: Evidence from Municipal Bond Underwriting," Review of Financial Studies, Vol. 21, No. 2 (April), 21: 763-784.
Local investment banks have an information advantage relative to non-locals in underwriting.
SSRN PDF Alexander W. Butler and Larry Fauver, "Institutional Environment and Sovereign Credit Ratings," Financial Management, Vol. 35, No. 3, (Autumn), 53-79.
Country-level legal institutions are the single most important determinant of sovereign credit ratings.
Runner up for Best Paper in Fixed Income Research at the 2005 Financial Management Association annual meetings
SSRN PDF Alexander W. Butler, Gustavo Grullon, and James P. Weston, "Can Managers Successfully Time the Maturity Structure of Their Debt Issues?" Journal of Finance, Vol. 61, No. 4, (August), 1731-1758.
The apparent ability of managers to time shifts in the yield curve is spuriously driven by the "Volcker experiment" structural break in the early 1980s.
Finalist for the Brattle Prize
SSRN PDF Tom Arnold, Alexander W. Butler, Timothy Falcon Crack, and Yan Zhang, 2005, "The Information Content of Short Interest: A Natural Experiment," Journal of Business, Vol. 78, No. 4, (July), 1307-1335.
We provide the broadest, cleanest test to date of the Diamond-Verrecchia (1987) model of the information content in short interest announcements.
Winner of the Distinguished Paper award at the 2001 Southwest Finance Association annual meeting
SSRN PDF Alexander W. Butler, Gustavo Grullon, and James P. Weston, 2005, "Stock Market Liquidity and the Cost of Issuing Equity," Journal of Financial and Quantitative Analysis, Vol. 40, No. 2, (June), 331-348.
Market liquidity matters to equity issuers and is priced by their investment banks.
SSRN PDF Alexander W. Butler, Gustavo Grullon, and James P. Weston, 2005, "Can Managers Forecast Aggregate Market Returns?" Journal of Finance, Vol. 60, No. 2, (April), 963-986.
The equity share's ('S') in-sample predictive power for market returns completely disappears out-of-sample due to structural breaks in the data.
Nominated for a Smith Breeden award
SSRN PDF Z. Ayca Altintig and Alexander W. Butler, 2005, "Are They Still Called Late? The Effect of Notice Period on Calls of Convertible Bonds," Journal of Corporate Finance, Vol. 11, No. 1-2, (March), 337-350.
Convertible bonds are not actually called late; previous tests were using the wrong normative model for call policy.
SSRN Alexander W. Butler and Pinghsun Huang, 2003, "On the Uniformity of Investment Banking Spreads: The Seven Percent Solution is not Unique," Journal of Multinational Financial Management, Vol. 13, No. 3, (July), 265-272.
The clustering of investment banking fees is unlikely driven solely by collusion: clustering is more severe in Hong Kong than in the U.S., but the mode is 2.5% rather than 7.0%
SSRN Tom Arnold, Alexander W. Butler, Timothy Falcon Crack, and Ayca Altintig, 2003, "Impact: What Influences Finance Research?" Journal of Business, Vol. 76, No. 2, (April), 343-361.
Some journals have a reputation built on a couple of superstar papers; we provide an outlier-robust method of journal ranking.
SSRN Alexander W. Butler, 2002, "Revisiting Optimal Call Policy for Convertibles," Financial Analysts Journal, Vol. 58, No. 1, (January/February), 50-55.
I incorporate an important institutional detail to develop a new normative model of convertible bond call policy; the model explains why convertibles may be called "late."
List of some current working papers (with SSRN links for abstracts and downloading):
SSRN PDF Stock Market Liquidity and the Long-Run Stock Performance of Debt Issuers, December 2006, with Hong Wan (SUNY-Oswego)
Liquid firms are likely to undertake public bond issues, thereby creating a sample selection bias that artificially induces "abnormal" long-run performance.
Revise and resubmit at Review of Financial Studies
SSRN PDF Does Access to Finance Improve Productivity? Evidence from a Natural Experiment, January 2008, with Jess Cornaggia (University of Texas at Dallas)
We use a quirky natural experiment (the ethanol mandates from the Energy Policy Act of 2005) and triple-differences tests to show that access to finance effects economic productivity and growth.
Revise and resubmit at Journal of Financial Economics
Presented at the 2008 WFA meetings.
Winner of the CRA award for Best Corporate Finance paper at the 2008 WFA meetings.
SSRN PDF Connected Companies' Compensation, August 2008, with Umit Gurun (UT-Dallas accounting)
CEOs earn substantially more in companies with investors who are socially connected to company executives due to information flow to connected investors and favorable voting on compensation proposals from connected investors.
SSRN On the Matching of Companies and their Financial Intermediaries: Evidence from Venture Capital, June 2008, with M. Sinan Goktan (Cal State - East Bay)
Grandstanding venture capitalists (those pushing portfolio companies public "too early") are also the best soft information producers, which is why portfolio companies choose to use them despite large expected costs of doing so.
SSRN Investment Bank Compensation and IPO Pricing, April 2008, with Hong Wan (SUNY-Oswego)
Compensation structure among the investment banking syndicate influences IPO offer prices.
SSRN A Note on Nonsense Predictive Regressions Arising from Structural Breaks, 2006, with Gustavo Grullon (Rice University) and James P. Weston (Rice University)
We show analytically how structural breaks in an economic time-series may result in spurious predictive regressions, whether or not there is any small-sample bias at play and show that the magnitude of this bias explains away the apparent predictive power of certain behaviorally-motivated variables.
Looking for my manuscript on the academic job market in finance (the "Rookie's Guide" paper)?
That paper has now been published and can be found here: Rookie's Guide; the SSRN version is still available, too. A very similar article takes our advice from the Rookie's Guide paper and recasts that advice for people interested in getting finance jobs at teaching schools; the teaching job article can be found here: Article. We also have an "Update" that contains new information for job seekers. A very slightly updated version of the update was published at FMA On-Line.