In this Essay, we revisit our analysis in A Sober Look at SPACs and assess whether that analysis—based on the 47 SPACs that merged between January 2019 and June 2020—provided a basis on which to predict that the dilution embedded in the SPAC structure would lead to severe shareholder losses...

SPACs have been widely criticized for imposing high costs on SPAC shareholders and for the incentive they create for sponsors to enter into mergers that are bad deals. Some SPACs adopt sponsor earnouts, which reduce a sponsor’s compensation unless specified post-merger share price targets are...

SPACs have been evolving recently in ways that make them even more expensive vehicles to take companies public, and thus in ways that will likely lead to even worse returns for shareholders who hold their shares through SPAC mergers. Each of the changes is designed to allow sponsors to continue...

How do firms' efforts to prevent harm to third parties change as they approach, enter, and then exit bankruptcy? To help answer this, I investigate a panel of roughly 350 US firms, all of which declare bankruptcy and are regulated under the Clean Water Act (CWA) for pollutants they release into...

Does high leverage incentivize banks to systematically originate and hold riskier loans? I construct a novel data set consisting of 3 million small business and home mortgage loans, matched to the specific banks that originated them and verified to be held on bank portfolios, rather than sold. I...

Abstract This paper explores the causal effect of foreclosure on individual well-being and social capital. Using plausibly exogenous variation in the timing of interest rate changes on different types of adjustable rate mortgages (ARMs), we find that a 10% rise in foreclosures is associated with...

We exploit the staggered and discontinuous changes in interest rates among adjustable rate mortgages to identify the effects of foreclosures independently of housing prices. First, interest rate resets predict foreclosure, accounting for up to 18% of the change in foreclosures. Second, a 10%...

In 2009, the Seventh Circuit ruled in U.S. v. Apex Oil that certain types of injunctions requiring firms to clean up previously released toxic chemicals were not dischargeable in bankruptcy. This was widely perceived to represent a split with Sixth Circuit precedent, although Supreme Court cert...

Over six million households experienced foreclosure during the financial crisis. Where did they move, how did they fare, and why? First, we create a new longitudinal dataset between 2006 and 2011 from households' date of foreclosure to their relocation. Despite significant heterogeneity in...