The ownership structures of Western European firms engender agency conflicts between: (i) owners and managers (type I); and (ii) minority and controlling shareholders (type II). Prior research stresses that credible financial reporting ameliorates agency problems by identifying any diversion of...

This study investigates whether financial analysts play a governance role in international debt markets by examining the link between analyst forecast characteristics and the cost of debt financing. Using a sample of 2,686 bond issues from 35 non-U.S. countries, we find statistically and...

Using a large sample of 115,534 firm-year observations from 46 countries over the period 1992 to 2007, we investigate the impact of political institutions on firms’ growth. We find that high levels of political constraint spur firms’ growth and that this positive impact is more pronounced in...

We examine the influence of political rights on the implied cost of equity capital using a sample of firms from 44 countries. We find that firms' equity financing costs are lower when political rights are stronger. We further find that political institutions' direct impact on the cost of equity...

We investigate the influence of national culture on corporate debt maturity choice. Based on the framework of Williamson, we argue that culture located in social embeddedness level can shape contracting environments by serving as an informal constraint that affects human actors’ incentives and...

For a large sample of 48 countries, we find robust evidence that strong creditor rights are associated with low long-term leverage across countries. We further find that strong creditor protection lowers long-term debt issuance, the extent to which investments are financed with long-term debt,...

We examine the effects of organization capital — evident in management quality practices — on firms' implied cost of equity. We show that superior management practices decrease firms' cost of equity capital. This novel finding, robust to a battery of sensitivity analyses and to endogeneity...

We examine the impact of foreign institutional shareholders on the prevalence of restrictive bond covenants using a sample of 959 Yankee bonds from 29 countries over the period 2001–2019. We find a significantly negative relation between foreign institutional ownership and debt covenants. This...

We explore the forces that drive cash savings in equity issuance using the average cash-savings rate instead of the marginal cash-savings rate that overstates individual issuers’ cash savings. Equity issuers with high investment opportunities save more cash in anticipation of greater cash...

This article examines the relation between firm-level political risk (PRISK) and real earnings management (REM). Using a sample of U.S. firms from 2002 to 2019, we find that PRISK increases REM. This finding remains robust to using alternative measures of PRISK, alternative regression models,...