Compelling empirical evidence documenting a material effect of corporate taxes on leverage decisions is limited, in part because of difficulties in constructing an effective proxy for the firm's tax benefit of debt. We examine leverage decisions across taxable and nontaxable real estate firms...

The corporate governance literature has shown that self-interested controlling owners tend to divert corporate resources for private benefits at the expense of other shareholders. Such behavior leads the controlling owners to prefer long maturity debt to short maturity debt, to avoid frequent...

Conditional conservatism has caused a controversy in recent literature in regards to whether it is rather driven by reporting demands originating from debt or equity markets. Extending the work of Ball/Shivakumar (2005), who found public companies to report conditionally more conservative than...

In this paper, we examine how financial leverage and information quality interactively affect the equilibrium investment and effort decisions, therefore affect overall efficiency. We find that when the financial leverage is in an intermediate range, overall efficiency may decrease in information...

This study examines the role of earnings management in the relationship between firm performance and capital structure, dividing earnings management into discretionary and nondiscretionary accruals to test established theories on the capital structure. Using data on 802 companies in the member...

In this study, we examine whether tax avoidance affects firm-level external financing choices. We hypothesize that firms marginally choose equity over debt because tax avoidance generates incremental cash flows but is likely risky. Consequently, we predict that tax avoidance induces a relative...

In light of the current debate about the link between accounting and financial stability, we investigate the determinants of procyclical book leverage for US commercial and savings banks. We find that total asset growth and GDP growth are both positively related to book leverage growth. Our...

While recent literature has documented that U.S. family firms differ markedly from their non-family counterparts, there is a paucity of evidence on how these firms differ in terms of their cost of capital or financial structure. In this paper, we show that family and non-family firms differ in...

Leverage ratios, the ratio of a firm's debt to equity or assets, is a frequently used measure of firm risk, utilized by firms, analysts, and investors. However, pension and other post-retirement benefits (OPRB) are largely ignored in determining a firm's total liabilities. Similarly, pension and...