We investigate how a firm's corporate pledgeable asset ownership (CPAO) affects the risk of future stock price crashes. Using pledgeable asset ownership and crash risk data for a large sample of U.S. firms, we provide novel empirical evidence that a firm's risk of a future stock price crash...

We examine the relation between creditor rights and stock price crash risk by exploiting the staggered enactment of anti-recharacterization laws that gives lenders greater access to the collateral and thus strengthens creditor rights. We find robust evidence that stock price crash risk subsides...

This study is motivated by the continuing popularity of the Altman Z-score as a measure of distress risk. Altman first introduced the ‘Z' score in 1968 and 50 years later it is still going strong as a means to predicting bankruptcy. During these 50 years, academicians have studied the...

A financial distress of company should be able anticipated smartly by its management to rerun the business without having any loss due to business failure. Thus, we need a model which could provide an early signal to company the probability of financial distress so that remedial efforts can be...

We test whether bank loans change public bond yields. A 10% increase in bank debt raises bond yields by 15bps, reflecting a trade-off between the benefits of bank cross-monitoring and higher bond risk. This effect is smaller for firms with no CDS and junk debt, where bank monitoring is most...

It is well understood that the equity of an insolvent firm can trade for a positive price so long as there is some positive probability that the firm will become solvent at some future point. Currently, however, this insight exists in the case law in an informal sense, while its use in the...

This study analyzed activism that leads to a merger or acquisition (M&A) of a firm to see its benefits for the shareholders at the target firm as well as its acquirer. It used over thirty years of data to understand the impact of the activists’ demands of strategic significance for the firms....

​Tracing the SEC ban on the short selling of financial stocks in September 2008, this paper investigates whether such selling activity before the 2008 short ban reflected financial companies' risk exposures in the subprime crisis. The evidence suggests that short sellers sold short stocks that...

Using a sample of Chinese listed firms from 2003 to 2018, we show that firms with a high dependence on government subsidies exhibit large stock price crash risk. We establish causality of government subsidy dependence on crash risk using instrumental variable regression and a...

This study uses 469,816 monthly observations of US public firms for the period 1990-2018 to document a strong positive relationship between short-term changes in financial distress risk and future stock price crashes. This result is economically significant as a one interquartile increase of the...