Using a large sample of U.S. firms for the period 1993-2009, we provide evidence that the sensitivity of a chief financial officer's (CFO) option portfolio value to stock price is significantly and positively related to the firm's future stock price crash risk. In contrast, we find only weak...

Using a natural experiment (Regulation SHO), we show that short selling pressure and consequent stock price behavior have a causal effect on managers' voluntary disclosure choices. Specifically, we find that managers respond to a positive exogenous shock to short selling pressure and price...

This study exploits the staggered adoption of the inevitable disclosure doctrine (IDD) by U.S. state courts as an exogenous shock that generates variations in the proprietary costs of disclosure. We find that firms respond to IDD adoption by reducing the level of disclosure regarding their...

We examine the impact of corporate tax avoidance on the price and non-price terms of bank loans. We predict and provide evidence that banks charge lower loan spreads and impose fewer covenant restrictions when firms exhibit greater tax avoidance. These favorable effects are more pronounced for...

This study investigates the effect of the debtor–creditor relationship on firms' tax planning decisions. We explore the initiation of credit default swaps (CDS) as a shock to the debtor–creditor relationship that attenuates the concavity of creditors' payoff function and reduces their...

This study examines the association between chief executive officer (CEO) overconfidence and future stock price crash risk. Overconfident managers overestimate the returns to their investment projects and misperceive negative net present value (NPV) projects as value creating. They also tend to...

Using a large sample of U.S. firms during 1964–2007, we find that conditional conservatism is associated with a lower likelihood of a firm's future stock price crashes. This finding holds for multiple measures of conditional conservatism and crash risk and is robust to controlling for other...

The recent financial crisis has stimulated a renewed interest in understanding the determinants of stock price crash risk (i.e., left tail risk). Recent research shows that opaque financial reports enable managers to hide and accumulate bad news for extended periods. When the accumulated bad...

Using a large sample of U.S. firms over the period 1964–2007, we find that conditional conservatism is associated with the lower likelihood of a firm's future stock price crashes. This finding holds for multiple measures of conditional conservatism and crash risk and it is robust to...

Using a large sample of loans initiated by firms targeted by hedge fund activists during 1994-2008, we show that hedge fund activism has significant impacts on firms' bank loan contracts. After the targeting announcement, and relative to firms that are not targeted, the targeted firms pay...