Publications by year
In Press
Onali E, Schaeck K, McGowan D, Danisewicz P (In Press). Debtholder Monitoring Incentives and Bank Earnings Opacity.
Journal of Financial and Quantitative Analysis Full text.
Onali E, Nguyen TVH, Ahmed S, Chevapatrakul T (In Press). Do stress tests affect bank liquidity creation?.
Journal of Corporate Finance Full text.
2020
Cardillo G, Onali E, Torluccio G (2020). Does gender diversity on banks' boards matter? Evidence from public bailouts.
Journal of Corporate FinanceAbstract:
Does gender diversity on banks' boards matter? Evidence from public bailouts
© 2020 the Authors We are the first to examine the impact of gender diversity on banks' boards on the probability and size of public bailouts. Our findings, based on a sample of listed European banks over the period 2005–2017, suggest that banks with more gender-diverse boards are less likely to receive a public bailout and receive a lower amount of bailout funds as a percentage of total assets than banks with less gender-diverse boards. Specifically, an increase by one standard deviation in gender diversity decreases the probability of a bailout by at least 2.44%, a significant reduction considering that the unconditional probability is 18.7%. Gender diversity is also positively related to bank performance, as proxied by ROA and Tobin's Q and with dividend payout ratios, consistent with the hypothesis that female directors are better monitors than male directors. These results are robust to a variety of econometric approaches and provide support for recent reforms in several EU countries regarding gender quotas.
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2018
Danisewicz P, McGowan D, Onali E, Schaeck K (2018). Debt priority structure, market discipline, and bank conduct.
Review of Financial Studies,
31(11), 4493-4555.
Abstract:
Debt priority structure, market discipline, and bank conduct
© the Author 2017. Published by Oxford University Press on behalf of the Society for Financial Studies. All rights reserved. We examine how debt priority structure affects bank funding costs and soundness. Leveraging an unexplored natural experiment that changes the priority of claims on banks’ assets, we document asymmetric effects that are consistent with changes in monitoring intensity by various creditors depending on whether creditors move up or down the priority ladder. The enactment of depositor preference laws that confer priority on depositors reduces deposit rates but increases nondeposit rates. Importantly, subordinating nondepositor claims reduces bank risk-taking, consistent with market discipline. This insight highlights a role for debt priority structure in the regulatory framework.
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Bruno B, Onali E, Schaeck K (2018). Market Reaction to Bank Liquidity Regulation.
Journal of Financial and Quantitative Analysis,
53(2), 899-935.
Abstract:
Market Reaction to Bank Liquidity Regulation
© 2018 Michael G. Foster School of Business, University of Washington. We measure market reactions to announcements concerning liquidity regulation, a key innovation in the Basel framework. Our initial results show that liquidity regulation attracts negative abnormal returns. However, the price responses are less pronounced when coinciding announcements concerning capital regulation are backed out, suggesting that markets do not consider liquidity regulation to be binding. Bank- and country-specific characteristics also matter. Liquid balance sheets and high charter values increase abnormal returns whereas smaller long-term funding mismatches reduce abnormal returns. Banks located in countries with large government debt and tight interbank conditions or with prior domestic liquidity regulation display lower abnormal returns.
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Danisewicz P, McGowan D, Onali E, Schaeck K (2018). The real effects of banking supervision: Evidence from enforcement actions.
Journal of Financial Intermediation,
35, 86-101.
Abstract:
The real effects of banking supervision: Evidence from enforcement actions
© 2016 Elsevier Inc. We present a novel way to examine macro-financial linkages by focusing on the real effects of bank supervisors’ enforcement actions. Exploiting plausibly exogenous variation in supervisory monitoring intensity, we show that enforcement actions in single-market banks trigger temporarily large adverse effects for the macroeconomy by reducing personal income growth, the number of establishments, and increasing unemployment. These effects are related to contractions in bank lending and liquidity creation, and are more pronounced when we consider enforcement actions on both single-market and multi-market banks, and in counties with fewer banks and greater external financial dependence.
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2017
Onali E, Ginesti G, Vasilakis C (2017). How should we estimate value-relevance models? Insights from European data.
British Accounting Review,
49(5), 460-473.
Abstract:
How should we estimate value-relevance models? Insights from European data
© 2017 Elsevier Ltd We study the consequences of unobserved heterogeneity when employing different econometric methods in the estimation of two major value-relevance models: the Price Regression Model (PRM) and the Return Regression Model (RRM). Leveraging a large panel data set of European listed companies, we first demonstrate that robust Hausman tests and Breusch-Pagan Lagrange Multiplier tests are of fundamental importance to choose correctly among a fixed-effects model, a random-effects model, or a pooled OLS model. Second, we provide evidence that replacing firm fixed-effects with country and industry fixed-effects can lead to large differences in the magnitude of the key coefficients, with serious consequences for the interpretation of the effect of changes in earnings and book values per share on firm value. Finally, we offer recommendations to applied researchers aiming to improve the robustness of their econometric strategy.
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Onali E, Ginesti G, Ballestra LV (2017). Investor reaction to IFRS for financial instruments in Europe: the role of firm-specific factors.
Finance Research Letters,
21, 72-77.
Abstract:
Investor reaction to IFRS for financial instruments in Europe: the role of firm-specific factors
© 2017 Elsevier Inc. We examine the market reaction to events related to the standard-setting process of International Financial Reporting Standard (IFRS) 9 for over 3,000 European firms that have adopted IFRS. We find that the market reaction to IFRS 9 is largely affected by firm-specific factors associated with information quality and information asymmetry. In particular, lower information asymmetry and higher information quality have a positive effect on market-adjusted returns. This is in conflict with the common view that IFRS 9 will improve accounting quality for those firms that need it most (namely, small firms with low liquidity and concentrated ownership structure).
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2016
Onali E, Galiakhmetova R, Molyneux P, Torluccio G (2016). CEO power, government monitoring, and bank dividends.
Journal of Financial Intermediation,
27, 89-117.
Abstract:
CEO power, government monitoring, and bank dividends
© 2015 the Authors We investigate the role of CEO power and government monitoring on bank dividend policy for a sample of 109 European listed banks for the period 2005–2013. We employ three main proxies for CEO power: CEO ownership, CEO tenure, and unforced CEO turnover. We show that CEO power has a negative impact on dividend payout ratios and on performance, suggesting that entrenched CEOs do not have the incentive to increase payout ratios to discourage monitoring from minority shareholders. Stronger internal monitoring by board of directors, as proxied by larger ownership stakes of the board members, increases performance but decreases payout ratios. These findings are contrary to those from the entrenchment literature for non-financial firms. Government ownership and the presence of a government official on the board of directors of the bank, also reduces payout ratios, in line with the view that government is incentivized to favor the interest of bank creditors before the interest of minority shareholders. These results show that government regulators are mainly concerned about bank safety and this allows powerful CEOs to distribute low payouts at the expense of minority shareholders.
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Onali E (2016). Can we predict dividend cuts?.
Economics Letters,
146, 71-76.
Abstract:
Can we predict dividend cuts?
© 2016 Elsevier B.V. I examine the predictability of dividend cuts based on the time interval between dividend announcement dates using a large dataset of US firms from 1971 to 2014. The longer the time interval between dividend announcements, the larger the probability of a cut in the dividend per share, consistent with the view that firms delay the release of bad news.
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Goddard J, Onali E (2016). Long memory and multifractality: a joint test.
Physica A: Statistical Mechanics and its Applications,
451, 288-294.
Abstract:
Long memory and multifractality: a joint test
© 2016 Elsevier B.V. The properties of statistical tests for hypotheses concerning the parameters of the multifractal model of asset returns (MMAR) are investigated, using Monte Carlo techniques. We show that, in the presence of multifractality, conventional tests of long memory tend to over-reject the null hypothesis of no long memory. Our test addresses this issue by jointly estimating long memory and multifractality. The estimation and test procedures are applied to exchange rate data for 12 currencies. Among the nested model specifications that are investigated, in 11 out of 12 cases, daily returns are most appropriately characterized by a variant of the MMAR that applies a multifractal time-deformation process to NIID returns. There is no evidence of long memory.
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2014
Onali E (2014). Moral Hazard, Dividends, and Risk in Banks.
Journal of Business Finance and Accounting,
41(1-2), 128-155.
Abstract:
Moral Hazard, Dividends, and Risk in Banks
In non-financial firms, higher risk taking results in lower dividend payout ratios. In banking, public guarantees may result in a positive relationship between dividend payout ratios and risk taking. I investigate the interplay between dividend payout ratios and bank risk-taking allowing for the effect of charter values and capital adequacy regulation. I find a positive relationship between bank risk-taking and dividend payout ratios. Proximity to the required capital ratio and a high charter value reduce the impact of bank risk-taking on the dividend payout ratio. My results are robust to different proxies for the dividend payout ratio and bank risk-taking. © 2014 John Wiley & Sons Ltd.
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Onali E, Ginesti G (2014). Pre-adoption market reaction to IFRS 9: a cross-country event-study.
Journal of Accounting and Public Policy,
33(6), 628-637.
Abstract:
Pre-adoption market reaction to IFRS 9: a cross-country event-study
© 2014 Elsevier Inc. We are the first to examine the market reaction to 13 announcement dates related to IFRS 9 for over 5400 European listed firms. We find an overall positive reaction to the introduction of IFRS 9. The regulation is particularly beneficial to shareholders of firms in countries with weaker rule of law and a smaller divergence between local GAAP and IAS 39. Bootstrap simulations rule out the possibility that sampling error or data mining are driving our findings. Our main findings are also robust to confounding events and the extent of the media coverage for each event. These results suggest that investors perceive the new regulation as shareholder-wealth enhancing and support the view that stronger comparability across accounting standards of European firms is beneficial to international investors and outweighs the costs of poorer firm-specific information.
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2012
Goddard J, Onali E (2012). Self-affinity in financial asset returns.
International Review of Financial Analysis,
24, 1-11.
DOI.
Goddard J, Onali E (2012). Short and long memory in stock returns data.
Economics Letters,
117(1), 253-255.
DOI.
2011
Onali E, Goddard J (2011). Are European equity markets efficient? New evidence from fractal analysis.
International Review of Financial Analysis,
20(2), 59-67.
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2010
Devalle A, Onali E, Magarini R (2010). Assessing the Value Relevance of Accounting Data After the Introduction of IFRS in Europe.
Journal of International Financial Management & Accounting,
21(2), 85-119.
DOI.
2009
Onali E, Goddard J (2009). Unifractality and multifractality in the Italian stock market.
International Review of Financial Analysis,
18(4), 154-163.
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