Robert W. Vishny’s research while affiliated with University of Chicago and other places

What is this page?


This page lists works of an author who doesn't have a ResearchGate profile or hasn't added the works to their profile yet. It is automatically generated from public (personal) data to further our legitimate goal of comprehensive and accurate scientific recordkeeping. If you are this author and want this page removed, please let us know.

Publications (107)


A Survey of Corporate Governance Summary
  • Presentation
  • File available

January 2022

·

2,237 Reads

·

8 Citations

·

Robert W Vishny

·

This study investigates how organizations can raise capital without ceding significant influence over their operations to investors. The purpose of this research is to provide light on the differences between theoretical and practical approaches to the subjects of corporate finance and management separation, to mention a few examples of topics covered. Because of the large amount of empirical material available in English, the United States is the primary focus of this investigation.

Download


Neglected Risks: The Psychology of Financial Crises †

May 2015

·

91 Reads

·

144 Citations

American Economic Review

We model a financial market in which investor beliefs are shaped by representativeness. Investors overreact to a series of good news, because such a series is representative of a good state. A few bad news do not change investor minds because the good state is still representative, but enough bad news leads to a radical change in beliefs and a financial crisis. The model generates debt over-issuance, “this time is different” beliefs, neglect of tail risks, under- and over-reaction to information, boom-bust cycles, and excess volatility of prices in a unified psychological model of expectations.


Finance and the Preservation of Wealth

September 2014

·

54 Reads

·

41 Citations

Quarterly Journal of Economics

We introduce the model of asset management developed in Gennaioli, Shleifer, and Vishny (“Money Doctors,” Journal of Finance, forthcoming 2015) into a Solow-style neoclassical growth model with diminishing returns to capital. Savers rely on trusted intermediaries to manage their wealth (claims on capital stock), who can charge fees above costs to trusting investors. In this model, the ratio of financial income to GDP increases with the ratio of aggregate wealth to GDP. Both rise along the convergence path to steady state growth. We examine several further implications of the model for management fees, unit costs of finance, and the consequences of shocks to trust and to the capital stock. JEL Codes: D91, E21, E44, G11.


Banks as Patient Fixed Income Investors

February 2014

·

37 Reads

·

29 Citations

Finance and Economics Discussion Series

We examine the business model of traditional commercial banks in the context of their co-existence with shadow banks. While both types of intermediaries create safe 'money-like' claims, they go about this in very different ways. Traditional banks create safe claims with a combination of costly equity capital and fixed income assets that allows their depositors to remain 'sleepy': they do not have to pay attention to transient fluctuations in the mark-to-market value of bank assets. In contrast, shadow banks create safe claims by giving their investors an early exit option that allows them to seize collateral and liquidate it at the first sign of trouble. Thus traditional banks have a stable source of cheap funding, while shadow banks are subject to runs and fire-sale losses. These different funding models in turn influence the kinds of assets that traditional banks and shadow banks hold in equilibrium: traditional banks have a comparative advantage at holding fixed-income assets that have only modest fundamental risk, but are relatively illiquid and have substantial transitory price volatility.


Banks as Patient Fixed Income Investors

January 2014

·

46 Reads

·

73 Citations

SSRN Electronic Journal

We examine the business model of traditional commercial banks when they compete with shadow banks. While both types of intermediaries create safe “money-like” claims, they go about this in different ways. Traditional banks create money-like claims by holding illiquid fixed-income assets to maturity, and they rely on deposit insurance and costly equity capital to support this strategy. This strategy allows bank depositors to remain “sleepy”: they do not have to pay attention to transient fluctuations in the market value of bank assets. In contrast, shadow banks create money-like claims by giving their investors an early exit option requiring the rapid liquidation of assets. Thus, traditional banks have a stable source of funding, while shadow banks are subject to runs and fire-sale losses. In equilibrium, traditional banks have a comparative advantage at holding fixed-income assets that have only modest fundamental risk but are illiquid and have substantial transitory price volatility, whereas shadow banks tend to hold relatively liquid assets.


Money Doctors

June 2012

·

227 Reads

·

66 Citations

The Journal of Finance

We present a new model of money management, in which investors delegate portfolio management to professionals based not only on performance, but also on trust. Trust in the manager reduces an investor’s perception of the riskiness of a given investment, and allows managers to charge higher fees to investors who trust them more. Money managers compete for investor funds by setting their fees, but because of trust the fees do not fall to costs. In the model, 1) managers consistently underperform the market net of fees but investors still prefer to delegate money management to taking risk on their own, 2) fees involve sharing of expected returns between managers and investors, with higher fees in riskier products, 3) managers pander to investors when investors exhibit biases in their beliefs, and do not correct misperceptions, and 4) despite long run benefits from better performance, the profits from pandering to trusting investors discourage managers from pursuing contrarian strategies relative to the case with no trust. We show how trust-mediated money management renders arbitrage less effective, and may help destabilize financial markets.


Neglected Risks, Financial Innovation, and Financial Fragility

June 2012

·

246 Reads

·

549 Citations

Journal of Financial Economics

We present a standard model of financial innovation, in which intermediaries engineer securities with cash flows that investors seek, but modify two assumptions. First, investors (and possibly intermediaries) neglect certain unlikely risks. Second, investors demand securities with safe cash flows. Financial intermediaries cater to these preferences and beliefs by engineering securities perceived to be safe but exposed to neglected risks. Because the risks are neglected, security issuance is excessive. As investors eventually recognize these risks, they fly back to the safety of traditional securities and markets become fragile, even without leverage, precisely because the volume of new claims is excessive.


Foreclosures, House Prices, and the Real Economy

January 2012

·

169 Reads

·

237 Citations

Atif Mian

·

·

Francesco Trebbi

·

[...]

·

Susan Woodward

Foreclosures during the 2007 to 2009 recession had a large negative effect on house prices, residential investment, and durable consumption. Our empirical methodology uses state laws requiring a judicial foreclosure as an instrument for actual foreclosures, as well as focusing on zip codes very close to state borders with differing foreclosure laws. We show that the likely channel for the house price effect is a large foreclosure-induced increase in the supply of houses on the market. Our findings are consistent with macroeconomic models in which the leverage-induced forced sale of assets amplifies negative shocks and reduces economic activity.


The Effect of Market Conditions on Initial Public Offerings 1

October 2011

·

548 Reads

·

55 Citations

A simple model is developed in the paper in which two market conditions change over time: (i) investor sentiment or price-insensitive demand; and (ii) feedback trader risk or the propensity of investors to chase trends. The model shows that these conditions partially explain the three anomalies associated with the IPO market: (i) underpricing; (ii) windows of opportunity for new issues and (iii) long-term underperformance. The model is tested using a sample of firm commitment IPOs over the 1975-1987 period. The paper finds that the predictions of the model are largely borne out in the data. on a previous draft were very helpful as were comments of participants in seminars at the University of North Carolina at Chapel Hill, INSEAD, the NBER Spring 1993 Corporate Finance meeting, and VPI. We thank Andrew Curtis for helpful research assistance.


Citations (92)


... Điều này diễn ra mạnh mẽ nhất đối với các ngân hàng có thế mạnh về đầu tư và có quy mô vốn lớn, đồng thời tập trung vào những chứng khoán có xếp hạng thấp và kỳ hạn dài. Bằng chứng thực nghiệm này phù hợp với các lý thuyết về tính chất cộng hưởng giữa nguồn vốn và tài sản của ngân hàng đã được chỉ ra trong rất nhiều nghiên cứu trước đó (Diamond, 2011;Diamond, 1983;Gennaioli, 2013;Hanson, 2015;Kashyap, 2002). Sự cộng hưởng này được thể hiện qua việc các ngân hàng có quy mô vốn lớn sẽ đầu tư vào những chứng khoán có mức độ rủi ro cao trong giai đoạn khủng hoảng kinh tế (chứng khoán có mức giảm giá sâu, đặc biệt là những chứng khoán xếp hạng thấp và kỳ hạn dài). ...

Reference:

Thực trạng hoạt động đầu tư trái phiếu của các ngân hàng thương mại Việt Nam
Banks as Patient Fixed Income Investors
  • Citing Article
  • February 2014

Finance and Economics Discussion Series

... It follows then that the investor should expect to place more trust in management whom they behave as stewards to accomplish business without much board interruption since agency problems have been reduced (Sama et al., 2022). Also, in such an environment there is much respect for the law, and transactions are organized in orderly, efficient, fair, and predictable manners (Judge et al. 2008;La Porta et al., 1999). Besides, there is a security for wealth and property rights against expropriation, since the judicial system effectively punishes unlawful managerial behavior (Swaleheen, 2011). ...

Investor Protection and Corporate Valuation
  • Citing Article
  • January 1999

SSRN Electronic Journal

... Administrative distance may negatively influence a common owner's ability to access and interpret information related to their agents, caused, for instance, by language barriers (Ferreira et al., 2017). Differences in shareholder rights (e.g., La Porta et al., 2000) may influence how well a common owner can use information to influence an investee firm. Cultural distance may hinder effective communication between foreign investors and local stakeholders, making it challenging to gather accurate information regarding agents and their potentially effective competitive actions. ...

Investor Protection and Corporate Governance
  • Citing Article
  • January 2000

SSRN Electronic Journal

... An alternative theory of public enterprise argues that they are inefficient because they become the means by which politicians attain their political objectives. Excessive employment, location in economically inefficient places, and underpricing of output all help politicians get votes or avoid riots (Boycko, Shleifer, and Vishny 1997). Privatization is just one possible mechanism that makes it more expensive for politicians to influence firms, which in turn reduces some amount of inefficiency that state firms accept to satisfy politicians, but may not be fully. ...

Privatizing Russia
  • Citing Article
  • July 1996

The Russian Review

... Фавқулодда харажатлар таркибига хўжалик субъектларининг одатий фаолият доирасидан чиқадиган ва уларни олиш кутилмаган ҳодиса ёки операциялар натижасида вужудга келадиган харажатлар киритилади [13]. Харажатлар таркиби ҳақидаги қоидаларда белгилаб қўйилганки, у ёки бу модда фавқулодда харажатлар моддаси сифатида акс эттирилиши учун у қуйидаги мезонларга жавоб бериши лозим: ...

Corporate Finance
  • Citing Article
  • December 2017

Journal of Political Economy

... The banking sector was hit firstly since the U.S. sub prime mortgage crisis had happened, and this crisis sounded the alarm to the banking sector. Then, it is an inevitable choice to establish international banking management model and continue to enhance the core competitiveness (Shleifer, 2009). Processing Bank System (PBS) is a kind of widely used management model for many international advances bank. ...

Unstable Banking
  • Citing Article
  • January 2009

SSRN Electronic Journal

... Jegadeesh and Titman (1993) concluded that the existence of the momentum effect is actually due to the lack of investor response to information. Subsequently, Barberis et al. (1998), Daniel et al. (1998) and Hong and Stein (1999) applied the research results of psychology experiments to the cause of the momentum effect. These scholars created the famous BSV, DHS and HS models used to describe the irrational trading behavior of investors. ...

Chapter 12. A Model of Investor Sentiment
  • Citing Chapter
  • January 2005

... We classify the dominant shareholder into those that are state owned and those that are private. State ownership of firms is frequently criticized because of political intervention and the need to help achieve government objectives (Boycko and Shleifer and Vishny, 1996, pp. 309–319). ...

A Theory of Privatization
  • Citing Article
  • January 1996

The Economic Journal

... However, the authors further clarify that when inflation reaches its lowest point, the cash holdings start to increase and the relationship becomes a positive one. The studies by Ferreira (2003) 13 and Shleifer and Vishny (1984) 32 opine that cash is a non-profitable asset and therefore cash holdings can cause a loss of purchasing power. In times of inflation, as prices and interest rates rise, capital costs also rise, further intensifying the opportunity cost of holding cash. ...

Liquidation values and debt monitoring
  • Citing Article
  • January 1984

Review of Economic Studies

... As such, innovators engage with more political connections because these enable them to avoid bureaucratic barriers (Ovtchinnikov, Reza, & Wu, 2020) and financial constraints to research and development (R&D) activities (Zhang and Guo, 2019). The complex nature of innovation involves ambiguity (Murphy et al., 1993) and innovation projects are long-term (Ayyagari et al., 2014), which offers more opportunities to extract rent through political ties. ...

Why is rent-seeking so costly to growth? American economic review papers and proceedings
  • Citing Article
  • January 1993