Summary:

This dissertation presents three essays on contemporary forces that transform global capital markets. First, the democratization of equity markets has important implications for market participants and market efficiency. While historically institutional investors and wealthy individuals were the primary players in equity markets, retail investors play an ever more active role. The surge in retail investor trading is facilitated by new types of financial technologies and innovation, which can prompt new dynamics in capital markets. In chapters II and III, I leverage a setting in which a new type of financial intermediary is introduced: a crowdsourced financial forecasting platform. In chapter II, co-authored with David Veenman, we study the implications of such an alternative financial intermediary on other market participants. We find that alternative crowdsourced forecasts of earnings and revenues help investors unravel the pessimistic bias in earnings announcement news that is commonly derived from traditional sell-side analyst forecasts. In chapter III, I utilize the data from online crowdsourced research to examine whether firms engage in a private disclosure channel to leak bad news when expected shareholder litigation risk increases. I find evidence consistent with that notion. Second, an emerging topic of interest concerns firms’ role in addressing climate change. In practice and academia, ever greater interest is placed on corporate emissions reporting and particularly scope 3 emissions reporting. However, such emissions arising along a firm’s supply chain are difficult to capture, mostly because of the opacity of the production and trading stages of supply chains.  In chapter IV, I shed light on global commodity supply chains and study the effects of local environmental regulation on the sourcing activity, sustainability performance, and sustainability disclosures of trading firms (and retail firms). To assess firms’ sustainability performance, I utilize novel data on firms’ exposure to deforestation linked to their business transactions.