We model the financing, cash holdings, and hedging policies of a firm facing financing frictions and subject to permanent and transitory cash flow shocks. We show that permanent and transitory shocks generate distinct, sometimes opposite, effects on corporate policies and use the model to...

This paper investigates the impact of financial constraints on firms' inventory holdings, an area of significant interest given that inventories are volatile over the business cycle. I use detailed data on Swedish firms' balance sheets, income statements, and credit scores. I employ a regression...

We use the staggered enactment of anti-recharacterization laws as a plausibly exogenous shock to the value of securitizing collateral through Special Purpose Vehicles (SPVs) and test how collateral values impact corporate risk management. Following the laws’ enactment, we find increases in...