Are Uncertain Firms Riskier?

Preetesh Kantak; Fahiz Baba-Yara; Carter Davis; Fotis Grigoris

doi:10.25740/ch304qn6196

Back

Working paper

Open access

Are Uncertain Firms Riskier?

Preetesh Kantak, Fahiz Baba-Yara, Carter Davis and Fotis Grigoris

Stanford Digital Repository

05/29/2024

DOI: 10.25740/ch304qn6196

Files and links (1)

url

https://doi.org/10.25740/ch304qn6196View

Open Access

Abstract

We use novel data covering 2 billion daily employee-article interactions across approximately 2 million firms to characterize firms’ exposures to uncertainty in almost real-time. We find that, in the cross-section, firms that more intensely read about financial versus other uncertainty-related topics are those most exposed to changes in aggregate measures of economic uncertainty. Consistent with exposure to uncertainty being priced, public firms that spend more time reading these topics have a 2% higher cost of capital, translating into relatively low investment rates. Higher attention to financial uncertainty relates to a 7% lower investment and a 5% lower hiring rate on an annual basis.

Cost of capital

Firms

Investment

Risk

Details

Title: Subtitle: Are Uncertain Firms Riskier?
Creators: Preetesh Kantak
Fahiz Baba-Yara
Carter Davis
Fotis Grigoris
Resource Type: Working paper
DOI: 10.25740/ch304qn6196
Publisher: Stanford Digital Repository
Number of pages: 70 pages
Language: English
Date posted: 05/29/2024
Academic Unit: Finance
Record Identifier: 9984634157902771

Metrics

20 Record Views