This paper presents evidence that firms choose conservative financial policies partly to mitigate workers' exposure to unemployment risk. We exploit changes in state unemployment insurance laws as a source of variation in the costs borne by workers during layoff spells. We find that higher...

This paper examines the relation between information asymmetry, capital structure and the cost of capital across countries, particularly focusing on how the relation is influenced by the various aspects of institutional environment. Results show that firms with more informational asymmetries...

In an approach analogous to Rajan and Zingales (1998), we examine how the ability to access long-term debt affects firm-level growth volatility. We find that firms in industries with stronger preference to use long-term finance relative to short-term finance experience lower growth volatility in...

We compare the determinants of the corporate debt ownership structure in a bank-oriented economy (Germany) and market-oriented economy (UK). The results, that are controlled for endogeneity, simultaneity and measurement errors, show that the firms in both countries adjust their debt ownership...

We estimate firms' cash flow sensitivity of cash to empirically test how the financial system's structure and activity level influence their financial constraints. For this purpose we merge Almeida, Campello and Weisbach (2004), a pathbreaking new design for evaluating a firm's financial...

We examine whether the effect of increased creditor rights on corporate borrowing depends on firm's access to internal capital. By exploiting a creditor protection reform in India, empirical outcomes strongly indicate that strengthening of creditor rights leads to increased corporate borrowing...

We contribute to the corporate capital structure and bank specialness literatures by studying the effects of bank debt on corporate value. We apply novel methodology to almost 60,000 firms in 110 countries over 17 years—over 300,000 total observations. We find that bank term loans and credit...

We examine if the sequence of stock market liberalization events matters for corporate financing choices. We contrast firms who attain ‘investable' status through domestic reforms with those who do so by issuing American Depository Receipt programs. We find that the first liberalization event...

This paper examines the relationship between firms' innovation activities and the hierarchy of financing behaviors. We analyse the role of innovation inputs (R&D), intermediate outputs (patents) and outcomes (product and process innovations) as sources of information asymmetry in financing...