In a hand-coded sample of M&A contracts from 2007-08, risk allocation provisions exhibit wide variation. Earn-outs are the least common means to allocate risk, indemnities are most common, followed by price adjustment clauses. Techniques for mitigating enforcement costs – escrows, holdbacks,...

In 2001, Nevada significantly limited the personal legal liability of corporate officers and directors. We use this exogenous shock to implement a differences-in-differences design that examines the impact of officer and director litigation risk on agency costs. We find decreased firm value,...

Risk is a vital concept to grasp when investing in a firm or project. It is also a key ingredient required to evaluate the cost of capital and perform a valuation. An organization’s capital structure, specifically the amount of leverage and debt financing employed, must be accounted for to...

Purpose: In most financial institutions, chief risk officers (CROs) and their risk management staff fulfill a role in managing risk exposures, yet their lack of involvement in the governance has been cited as an influential factor that contributed to the financial crisis of 2007-2008. Various...

Using hand-collected data on chief executive officer (CEO) non-compete agreements (NCAs), we find that NCAs are less likely when CEOs expect to incur greater personal costs from reduced job mobility and more likely when firms expect to suffer greater economic harm if departing CEOs work for...

We study the impact of shareholder-initiated litigation risk on a firm's stock price crash risk. Our empirical analysis takes advantage of the staggered adoption of universal demand laws, which led to an exogenous decline in derivative litigation risk. We find that a decline in the threat of...

We revisit the research question centering around the impact of the market for corporate control on stock price crash risk. Using a newly-developed takeover index from Cain, McKeon, and Solomon (2017) that comprehensively considers existing state takeover laws, federal statutes, and state court...

Risk management and oversight have long been recognized as core corporate governance issues and have gained renewed attention in the wake of the financial crisis. Following global trends, recent corporate governance reforms in China also focus on risk oversight and risk management. This article...

We examine the effect of labor unemployment risk on corporate accounting conservatism by exploring the relationship between unemployment insurance benefits and conservatism. We find that lower perceived unemployment risk (i.e. higher unemployment insurance benefits) is associated with lower...