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  5. AFA Panel - Journal of Finance: Insights and Perspectives
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AFA Panel - Journal of Finance: Insights and Perspectives

Paper Session

Sunday, Jan. 3, 2027 8:00 AM - 10:00 AM (EST)

Westin DC Downtown
Hosted By: American Finance Association
  • Chair: Janice Eberly, Northwestern University

Is That a $100 Bill on the Sidewalk?

Philip Bond
,
University of Washington

Abstract

I analyze a setting in which investors sequentially encounter a potentially profitable investment opportunity, and decide both whether to investigate its quality and whether to exploit the opportunity. Once exploited, the opportunity is unavailable to future investors. The key friction is that an investor observes only whether the opportunity remains available, but is ignorant about the number of investors who have already investigated the opportunity. The probability that the opportunity is exploited decreases in the number of investors. Safe opportunities are exploited more often than risky ones, even controlling for average profitability. Higher exploitation probabilities are generally associated with lower observed Sharpe ratios.

Most Claimed Statistical Findings in Cross-Sectional Return Predictability Are Likely True

Andrew Chen
,
Federal Reserve Board

Abstract

I develop simple and intuitive bounds for the false discovery rate (FDR) in cross-sectional return predictability publications. The bounds can be calculated by plugging in summary statistics from previous papers and reliably bound the FDR in simulations that closely mimic cross-predictor correlations. Most bounds find that at least 75% of findings are true. The tightest bound finds at least 91% of findings are true. Surprisingly, the estimates in Harvey, Liu, and Zhu (2016) imply a similar FDR. I explain how Harvey et al.s conclusion that most findings are false stems from equating false and insignificant.

Artificial Intelligence, Productivity, and the Workforce: Evidence from Corporate Executiv

Salome Baslandze
,
Federal Reserve Bank of Atlanta
Zachary Edwards
,
Federal Reserve Bank of Richmond
John Graham
,
Duke University
Ty McClure
,
Federal Reserve Bank of Atlanta
Michael Sparks
,
Federal Reserve Bank of Atlanta
Brent Meyer
,
Federal Reserve Bank of Atlanta
Sonya Waddell
,
Federal Reserve Bank of Richmond
Daniel Weitz
,
Federal Reserve Bank of Atlanta

Abstract

"We use novel data from a survey of nearly 750 corporate executives to study the effects of artificial intelligence (AI) on productivity and the workforce. We document substantial heterogeneity in AI adoption across firms, with more than half having already invested, though many smaller firms are only beginning to do so. Labor productivity gains are positive, vary across sectors, and are expected to strengthen in 2026, with the largest effects concentrated in high-skill services and finance. These gains are not primarily driven by firms’ capital deepening but instead reflect increases in revenue-based total factor productivity, closely associated with innovation- and demand-oriented channels. We document a productivity paradox, in which perceived productivity gains are larger than measured productivity gains, likely reflecting a delay
in revenue realizations. In labor markets, we find little evidence of near-term aggregate employment declines due to AI, though larger companies anticipate AI-driven workforce reductions, while smaller firms expect modest gains. We also find evidence of compositional reallocation of labor both within and across firms, with routine clerical roles declining and a relative demand for skilled technical roles increasing. We develop an index that ranks job functions most negatively affected by AI."

Corporate Actions as Moral Issues

Zwetelina Iliewa
,
University of Bonn
Elisabeth Kempf
,
Harvard University
Oliver Spalt
,
University of Mannheim

Abstract

We examine nonpecuniary preferences across a broad set of corporate actions using a representative sample of the U.S. population. Our core findings, based on large- scale online surveys, are that (i) self-reported nonpecuniary concerns are large both for stock market investors and non-investors; (ii) concerns about the treatment of workers and CEO pay rank highest-higher than concerns about workforce diversity and fossil energy usage; (iii) Moral Foundations Theory emerges as an important framework for explaining nonpecuniary preferences. Combined, our findings provide new evidence on the importance of moral values as a key determinant of nonpecuniary preferences over corporate actions.

Discussant(s)
David Thesmar
,
Massachusetts Institute of Technology
Arvind Krishnamurthy
,
Stanford University
Valentin Haddad
,
University of California-Los Angeles
JEL Classifications
  • G0 - General