We examine the effect of debt financing capacity on firm innovation by employing a shock that increases firms' asset pledgeability. We find that firms increase innovation activities after the shock, and the increase is greater in regions with more effective enforcement and in firms with more...

While pledging shares as collateral for personal loans is commonly practiced in many countries that protect minority shareholders, the empirical evidence has shown only its value destruction to shareholders. This paper offers an (partial) explanation of this puzzle by documenting a positive...

Using two exogenous shocks, we examine the causal impact of stock liquidity on firms’ dividend policy. Both the first shock, the reduction of the minimum tick size from one sixteenth to decimals in the US, and the second shock, the mandatory conversion of non traded stocks to traded stocks in...