This paper examines local bias in the context of venture capital (VC) investments. Based on a sample of US VC investments between 1980 and June 2009, we find more reputable VCs (older, larger, more experienced, and with stronger IPO track record) and VCs with broader networks exhibit less local...

We derive and develop a simple and intuitive model that shines fresh light on the relentless debate over whether corporate ownership converges to the Berle-Means modern corporation with high stock ownership dispersion. Our model takes into account the importance of both protective legal...

This paper provides a compact summary of the evidence on capital structure instability and a case-based exploratory investigation of sources of such instability. Substantial instability in capital structure is the norm at publicly held nonfinancial firms. Firm-specific episodes of leverage...

We examine the determinants of corporate liquidity management through the lens of an estimated dynamic model of corporate investment and financing. When external finance is costly, firms can absorb shocks and cover liquidity needs by holding cash and by drawing down credit lines. In contrast to...

The capital asset pricing model (CAPM) receives both criticism and widespread adoption by practitioners and academics as the weighted average cost of capital (WACC) equity component. This study introduces two new costs of equity measures to address CAPM criticisms and provide new perspective on...

Absent theoretical guidance, empiricists have been forced to rely upon numerical comparative statics from constant tax rate models in formulating testable implications of tradeoff theory in the context of natural experiments. We fill the theoretical void by solving in closed-form a dynamic...

This paper investigates abnormal standardized returns (ASRs) after major corporate events. Dutta, Knif, Kolari, and Pynnonen (2018) have shown that the ASR t-test has superior size and power compared to traditional test statistics. Based on this new test statistic compared to traditional test...

Purpose: To investigate (provide empirical testing) the effect of ownership structure on corporate dividend policies by top 50 Egyptian companies for the years 1998-2002Design/ methodology / approach: Two dependent variables representing dividend policies; dividend decision and dividend yield...

According to the prior literature, family executives of family-controlled firms receive lower compensation than non-family executives. One of the key driving forces behind this is the existence of family members who are not involved in management, but own significant fraction of shares and...

We develop a dynamic model of a firm in which cash management is partially delegated to a self-interested manager. Shareholders trade off the cost of dismissing the manager with the cost of managerial discretion over the use of liquid funds. An improvement in corporate governance quality may...