Existing literature usually considers earnings manipulation to be a negative social phenomenon. We argue that earnings manipulation can be a part of the equilibrium relationships between firm's…insiders and outsiders. We consider an optimal contract between an entrepreneur and an investor where...

It has long been recognized that the quality of property rights greatly impacts the economic development of a country and the use of its natural resources. Since Long (1975), the conventional wisdom has been that ownership risk induces a firm to overuse the stock of a resource. However, the...

Using internal data of a leasing company in Germany, we examine the determinants of the probability and use of leasing by small firms. We find that small and young firms are likely to be constrained on the leasing market but use leasing to increase their debt capacity. Beyond contract- and...

I empirically show that the time delay firms face in raising outside capital affects cash holdings. I exploit the 2005 Securities Offering Reform (the Reform) as a quasi-natural experiment. For a subset of large public US firms, the Reform relaxed the requirement to undergo the standard review...

We empirically show that the time delay for raising debt in public markets has a pronounced impact on firms' switching to private placement. We exploit the 2005 Security Offerings Reform as a quasi-natural experiment where for a subset of large U.S. firms the regulatory delay (1-1.5 month)...

We use the link between financial constraints and a firm's demand for liquidity to develop a new test of the effect of financial constraints on firm policies. The effect of financial constraints can be captured by a firm's propensity to save cash out of incremental cash inflows (the quot;cash...

Prior research has posited that market imperfections and the lack of institutions which protect investor interests create a divergence between the cost of internal and external funds, thereby constraining firms' ability to fund investment projects through external financing. One consequence of...

We provide empirical evidence on how delay in raising outside capital affects firms' financing decisions. We exploit the 2005 Security Offerings Reform as a quasi-natural experiment where for a subset of large US firms the regulatory delay (1-1.5 months) associated with raising public debt is...

Using internal data of a leasing company in Germany, we examine the determinants of the probability and use of leasing by small firms. We find that small and young firms are likely to be constrained on the leasing market but use leasing to increase their debt capacity. Beyond contract- and...

Could a new “discourse theory” of the firm provide a better way than existing corporate law principles to understand the evolving nature of the firm and the role shareholders should play in corporate governance? Two recent developments provide a special urgency for considering the question....