We develop a dynamic model with time variation in external equity financing costs and show that variation in these costs is important for the model to quantitatively capture the joint dynamics of firms' asset prices, real quantities, and financial flows in the U.S. economy. Growth firms and high...

This study derives and evaluates estimates of the equity risk premium inferred from the stock prices and analysts' earnings forecasts of U.S. insurance companies. During most of the sample period, April 1983 through September 2012, the quarterly median implied equity risk premium (IERP) of U.S....

I use an accounting reform to assess the agency cost of debt in diversified firms. Firms that switch from single-to-multisegment following the reform suffer a 12% increase in the bond spread than their standalone peers. Consistent with lenders anticipating underinvestment and asset substitution...

This paper contrasts UK and US governance of M&A break fees to see what the contrast can teach us about trade-offs between litigation and regulation as modes of governance, including how laws change under each regime over time. Data on 1,136 bids in 1989-2008 and 61 fee disputes show: (1) the UK...

This paper uses analysts' forecasts to estimate a share's equity duration, a measure of a company's average cash-flow maturity. We find that short duration equity is associated with high expected and realized returns, which cannot be attributed to the shares' systematic risk exposure as implied...

Horizontal shareholding exists when significant shareholders have stock in horizontal competitors. (It is often imprecisely called "common shareholding," but that term can also apply when shareholders own stock in two noncompeting corporations. It differs from "cross-shareholding," which...

This Article shows that new economic proofs and empirical evidence provide powerful confirmation that, even when horizontal shareholders individually have minority stakes, horizontal shareholding in concentrated markets often has anticompetitive effects. The new economic proofs show that,...

Illiquidity measures appear to be related to monthly realized returns but do they impact long-run costs of capital (CoC) for firms? Using U.S. data, we find cross-sectional evidence that, controlling for market capitalization, the Amihud (2002) measure of illiquidity is negatively related to CoC...