This paper documents a negative relation between current leverage and future growth. This relation holds within and across industries, when leverage is assumed to depend directly on future growth, and irrespective of which variables are used to forecast growth. Its economic significance exceeds...

Berger and Ofek (1995) confirm recent evidence by Lang and Stulz (1994) of a value loss from diversification in the 1980s, and use segment-level data to estimate the magnitude of the loss. They find that, during 1986-1991, the average diversified firm destroyed about 15% of the value its lines...

We investigate whether investors price and the real option to abandon the firm for its liquidation value. Theory prices this real option as an American put with both a stochastic strike price (liquidation value) and a stochastic value of the underlying security (the value of cash flows). The...

We test the prediction that leverage is inversely associated with managerial entrenchment. We examine leverage levels and year-to-year changes for several hundred firms between 1984 and 1991. We find that leverage levels are positively related to CEO stock ownership and CEO stock option...

We provide evidence that corporate refocusing are motivated, in part, by the desire to enhance shareholder value, but that it is often necessary for agency problems to be reduced before managers will begin divestiture programs. Diversified firms that refocus have significantly greater value...

We investigate whether investors price the option to abandon the firm for its liquidation value. Theory prices this real option as an American put with both a stochastic strike price (liquidation value) and a stochastic value of the underlying security (the value of cash flows). The major...

After an initial public offering, most existing shareholders are subject to a lock-up period in which they cannot sell their shares for a prespecifed time. At the end of the lock-up, there is a permanent and large shift in the supply of shares. The lock-up expiration is a particularly...

We find that executives sell shares of previously owned stock after receiving equity-based incentive compensation, counteracting boards' attempts to tie their wealth to firm value. Executives sell stock during years in which they receive new stock options or restricted stock, and some evidence...

We study associations between managerial entrenchment and firms capital structures, with results generally suggesting that entrenched CEOs seek to avoid debt. In a cross-sectional analysis, we find that leverage levels are lower when CEOs do not face pressure from either ownership and...

We study the precursors and outcomes of refocusing episodes by diversified firms that were not taken over. Those that refocus have more value-reducing diversification policies than those not refocusing. Major disciplinary or incentive-altering events (including management turnover, outside...