Our paper provides evidence regarding the use of share repurchases as an earnings management mechanism in the presence of debt-financing constraints as well as the impact of these constraints on the use of accruals and other real earnings management techniques. We document that share repurchases...

Canadian firms have different roots (e.g., more concentrated ownership and smaller size) than U.S. firms and Canadian regulatory enforcement follows a different route (principle- versus rule-based) that embodies the underlying intent of Sarbanes–Oxley (SOX). Financial restatements are more...

This paper explores whether private equity firms that are new to the industry take excessive risks relative to funds from established firms. We use differences between the implicit incentives of managers of experienced and of novice funds as an identification strategy. We find that novice funds...

This paper uses a dynamic partial equilibrium model to explain a puzzle of dividend smoothing. In contrast to the Modigliani–Miller theory, I show that firm value depends on payout policy. The analysis implies that firms with more stable dividend stream are more valuable. This explains why...

We test the hypothesis that ownership of a firm does not affect the firm's ability to seize market opportunities once decisions about productive structure are taken into account. By grouping firms in size clusters having a similar distance between the actual and the optimal size, we assess how...

The value of a conventional convertible bond is the value of a straight bond plus the value of the option to exchange it for a specified number of shares of common stock. First, I develop a closed-form contingent-claims convertible bond valuation model that quantifies the value of the exchange...

This paper studies the impact of regulation on IPO markets using historical data. Regulatory interventions have different effects on the development of public equity markets under different conditions. Studying the whole population of 879 Italian IPOs from the unification of Italy (1861) through...

Recent research finds that investors, broadly defined, react to the linguistic tone of quarterly earnings conference calls; there is a positive relation between firms' stock returns and call tone (a measure of “sentiment” related word tabulations). However, this type of soft information can...

We provide evidence that existing studies relating financial condition to product market cooperation produce mixed results because of unique features of the industries examined. In particular, all evidence suggesting that poor financial condition decreases cooperation comes from the airline...

This paper examines the role of buyer–supplier relationships on suppliers' financial constraints. Buyers are non-financial stakeholders with both the ability and incentive to monitor their supplier and act as a certifying agent. This mitigates agency costs, reducing the wedge between the costs...