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...

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,...

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 use the staggered introduction of a major financial reporting regulation worldwide to study whether firms make financing decisions consistent with the pecking order theory. Exploiting cross-country and within country-year variation, we document that treated firms increase their issuance of...

This study examines the relation between accounting conservatism and firms' capital structure adjustments. We find that firms with more conservative financial reporting adjust their capital structure toward the target more quickly, especially within firms that rely more on external financing for...

Deleveraging has two components -- shrinking of balance sheets due to increased haircuts/shedding of assets, and the reduction in the interconnectedness of the financial system. We focus on the second aspect and show that post-Lehman there has been a significant decline in the interconnectedness...

We find that an increase in a firm's incentives to use trade secrets to protect its intellectual property results in a more actively managed capital structure. Exploiting U.S. states' adoption of the Uniform Trade Secrets Act as a positive “shock” in the protection afforded to trade secrets,...

When larger market values of equity result in being subject to costly regulation, firms have incentives to shift their sources of financing toward debt and away from equity. We use the Sarbanes-Oxley Act of 2002 (SOX) as a setting to provide evidence of such incentives. Smaller firms were...

By allowing large classes of movable assets to be used as collateral, the Property Law reform transformed the secured transactions in China. Difference-in-differences test show firms operating with ex-ante more movable assets expand access to bank credit and prolong debt maturity. However, the...

Twentieth century Japan provides a remarkable laboratory for examining how an externally imposed institutional and regulatory intervention affects the ownership of corporations. In the first half of the century, Japan had weak legal protection but strong institutional arrangements. The...