Publication Type
Journal Article
Version
acceptedVersion
Publication Date
2-2025
Abstract
Information production associated with derivatives markets is not a sideshow; rather, it has significantly positive spillover effects on an array of corporate decisions of underlying firms. Using a regression-discontinuity design based on exogenous variation in options availability as an instrument for changes in the information environment, we show that options introductions have causal effects on corporate policies on both sides of the balance sheet. Through improved information efficiency, options availability reduces the need for debt and payout, increases efficient investment, and yields superior innovation. We conduct two independent experiments demonstrating that our instrument s impact is not derived from alternative channels.
Keywords
Option trading, information value, volatility
Discipline
Corporate Finance | Finance and Financial Management
Research Areas
Finance
Publication
Journal of Financial and Quantitative Analysis
Volume
60
Issue
1
First Page
447
Last Page
481
ISSN
0022-1090
Identifier
10.1017/S0022109023001229
Publisher
Cambridge University Press
Citation
BERNILE, Gennaro; HU, Jianfeng; LI, Guangzhong; and MICHAELY, Roni.
Information spillover and corporate policies: The case of listed options. (2025). Journal of Financial and Quantitative Analysis. 60, (1), 447-481.
Available at: https://ink.library.smu.edu.sg/lkcsb_research/7350
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.
Additional URL
https://doi.org/10.1017/S0022109023001229
