Theoretical research argues that convertible bonds mitigate the contracting costs of moral hazard, adverse selection, and financial distress. Using firm-specific and macroeconomic factors of the contracting costs, we examine the extent to which they impact the likelihood of issuance and the...

We analyze whether fluctuation in economy-wide factors cause time-series variation in the contracting costs of moral hazard, adverse selection, and financial distress, and so create windows of opportunity for firms to issue debt. Using the announcement period abnormal returns as one measure of...

We examine the impact of macroeconomic and firm-specific factors on the likelihood of issuance and the structure of convertible bonds. Consistent with convertibles mitigating financial distress and contracting costs, our results indicate that the likelihood of issuing convertible bonds compared...

We empirically examine whether the elimination of negative synergies, the reduction of internal capital market inefficiencies, and the mitigation of information problems following spinoffs lower cost of equity. The results indicate that there is no decrease in the cost of equity in the full...

A strategic alliance is a hybrid organizational form that is between an arms length contract and a full-fledged merger between firms. In some alliances firms take a minority equity stake in the partner firm. We refer to these as equity alliances. Using data on 759 alliances, we examine the...

A merger requires at least one of two separate yet equally important sets of negotiations. The first set involves merging parties to discuss issues related to the terms of the merger, including target firm's valuation. The second set resolves disputes between the merging parties and the law...

We empirically examine whether the elimination of negative synergies, the reduction of internal capital market inefficiencies, and the mitigation of information problems following spinoffs lower cost of equity. The results indicate that there is no decrease in the cost of equity in the full...

Extant literature demonstrates that participating policies mitigate shareholder-policyholder incentive conflicts in stock insurance firms. However, extending the argument in Mayers and Smith (1994), we formally show that participating policies also exacerbate the shareholder-manager incentive...

We model the capital structure choice of a firm that operates under imperfect competition. Extant literature demonstrates that debt commits a firm to an aggressive output stance, which is an advantage to the firm under Cournot competition. However, empirical evidence, indicates that debt is, in...

We empirically analyze the information hypothesis that the separation of a firm's divisions into independently traded units through a spin-off is value enhancing because it mitigates information asymmetry about the firm. Consistent with this hypothesis, we find that firms that engage in...