Agency theory - as applied to debates in corporate governance - rests on a myth of separated ownership and control. The true separation, however, is between ownership and ownership: ownership of shares by shareholders and ownership of assets by the corporation. Shareholders are not principals;...

We survey the theory and evidence of behavioral corporate finance, which generally takes one of two approaches. The market timing and catering approach views managerial financing and investment decisions as rational managerial responses to securities mispricing. The managerial biases approach...

We survey the theory and evidence of behavioral corporate finance, which generally takes one of two approaches. The market timing and catering approach views managerial financing and investment decisions as rational managerial responses to securities mispricing. The managerial biases approach...

Mutual fund holdings data reveal a significant impact of mutual funds on the capital expenditures ("CapEx'') of their portfolio companies. Following the shock to mutual fund ownership caused by the 2003 scandal, during which 25 fund families experienced significant outflows of capital, firms...

I show that access to the public debt market is associated with a significant reduction in the level of capital expenditures and takeovers, especially for firms with higher credit risk. Firms accessing the bond market also become less likely to violate debt covenants, reduce the level of payouts...

We show that the value of corporate diversification increased during the 2007–2009 financial crisis. Diversification gave firms both financing and investment advantages. First, conglomerates became significantly more leveraged relative to comparable focused firms. Second, conglomerates' access...

We examine whether and why the value of diversification changed during the 2008–2009 financial crisis. We find that diversified firms increased in value relative to single-segment firms during the crisis, a result that is not driven by the endogeneity of either financing constraints or firms'...

We exploit an exogenous shock to corporate ownership structures created by a recent tax reform in Germany to explore the link between corporate governance and internal capital markets. We find that firms with more concentrated ownership are less diversified and have more efficient internal...

This paper examines the Transaction Cost Economics (TCE) theory of capital structure and finds that for the case of equity the usual TCE logic is not fully worked out. In particular, an analysis of the key issue of bilateral dependency between the firm and its shareholders is absent. To fill...

We show that large boards are detrimental to the performance of Japanese firms. Unlike in the US, this effect is concealed by the fact that Japanese firms that have performed well are more likely to increase the size of their boards. Using an instrumental variable approach to address this...