We examine the relation between the presence of an independent director who is a blockholder (IDB) and corporate policies, risk-taking and market valuation. After accounting for endogeneity, firms with an IDB have significantly (1) lower levels of cash holdings, payout and R&D expenditures, (2)...

We follow the financing choices over time of established companies with initial high profitability and low leverage, company by company. The behaviour of most suggests preference for low leverage or indifference to leverage so long as it is not excessive (debt/assets above 50%). Companies lever...

We utilize a novel identification strategy to analyze the impact of assets in place on firms' decisions for future projects. We exploit the context in the pharmaceutical industry, where the loss of market exclusivity for a branded drug can be used to separate the impact of cash flows generated...

This is the supplemental material to the paper titled "External Financing and Customer Capital: A Financial Theory of Markups." It includes additional empirical, theoretical, and quantitative results. It also includes illustration for the numerical algorithm for our model solution

We study whether corporate cash holdings are optimal or excessive by exploiting a Korean tax reform that imposes a new tax on earnings not paid out to shareholders or reinvested. Firms treated by the reform reduce cash savings, and market participants react favorably. Increases in value are...

I develop a hypothesis that predicts nonlinear patterns of leverage and cash holdings over firms' financial flexibility demand stages. The hypothesis also predicts distinctive financing patterns over the financial flexibility demand stages. The empirical results support the hypothesis:...

We develop a continuous-time industry equilibrium model of monopolistic competition to understand how product markups are determined in the presence of external financing costs and customer capital. Firms optimally set markups to balance the tradeoff between profiting from their existing...

A recent dramatic rise in the assets managed by passive corporate debt funds has profound implications for firm financing and payout policy. I use fund-specific flows to isolate exogenous increases in firm-level passive debt ownership at a firm. Firms respond to higher levels of passive debt...

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...