This paper tests for the sensitivity of R&D to financing constraints conditional on restrictions in external financing. Financing constraints of firms are identified by an exogenously calculated rating index. Restrictions in external financing are determined by (i) the specific time period...

We test whether bank loans change public bond yields. A 10% increase in bank debt raises bond yields by 15bps, reflecting a trade-off between the benefits of bank cross-monitoring and higher bond risk. This effect is smaller for firms with no CDS and junk debt, where bank monitoring is most...

This study explores a natural experiment that involves the change in the regulation of earnings forecast disclosures from mandatory to voluntary in firms' IPO prospectuses. Findings indicate a behavioural alteration with pessimistic earnings forecasts during the mandatory era turning optimistic...

This chapter explores compensation structure of PE funds. Actual fees that GPs earn and the economic incentives that they face are more subtle and complex than the traditional “2-and-20” rule suggests. This chapter examines the sources of these complexities especially focusing on the...

Initial public offering (IPO) underpricing is positively correlated with managerial confidence. We hypothesize that highly overconfident managers, who tend to overvalue their own firm, use underpricing to signal their beliefs to the market in an effort to receive greater value for their shares...

Information flows are of critical importance for IPO pricing. We posit that individual investment bankers use personal social capital to address information problems during IPOs. Using a unique database of mutual fund bids in the Chinese IPO market, we find that when an investment banker has a...

How do different types of debt influence firm credit risk? This paper sheds new light on this issue by decomposing the leverage ratio into market debt, bank debt, and trade credit leverage ratios by balance sheet account type classification; and short-term debt and long-term debt leverage ratios...

I utilize the recursive partitioning method to extract analysts' weight of forecasts assigned in their stock recommendation decisions. My findings suggest that in addition to analysts' earnings forecasts, the non-earnings forecasts, such as sales forecasts and net income forecasts, also play an...

IPO firms with high-powered CEO incentive contracts have lower failure rates in the aftermarket. Economically, an interquartile change in the distribution of CEO pay translates in a reduction of the failure risk probability by approximately 21%. The Pay Gap between the CEO and its subordinate...

Using 2002–2014 insurer transactions, we provide the first empirical evidence on underwriters' allocation practices in the primary market for corporate bonds. Since bonds are often underpriced, allocations generate for investors an estimated $41 billion of first-day profits. These profits...