Prior literature shows that firms are less likely to pay dividends to preserve financial flexibility when facing greater competitive threats from rival firms in product markets. However, the real effects of dividend policy on product market outcomes are not widely understood. This paper...

This paper investigates the compensation and growth dynamics of private equity firms. Using proprietary data, I estimate that about half of their revenue is performance-related and find that current fund performance also has indirect effects on firms’ future revenue. The dynamics of these...

This paper shows that the effect of inflation on asset prices and real aggregates depends on the financial intermediation sector. When firms finance using nominal long-term debt issued by financial intermediaries, unexpected changes in inflation lead to a wealth transfer across sectors. Higher...

Corporate finance theory provides both precise and approximate formulas for the maximum growth rate of a firm, typically called the internal growth rate (when no external funds are permitted) and the sustainable growth rate (when the capital structure is held fixed). The assumption in these...

Although firm financial policies were affected by a credit contraction during the recent financial crisis, the impact of increased uncertainty and decreased growth opportunities was stronger than that of the credit contraction per se. From the start of the financial crisis (third quarter of...

Corporate finance theory provides both precise and approximate formulas for the maximum growth rate of a firm, typically called the internal growth rate (when no external funds are permitted) and the sustainable growth rate (when the capital structure is held fixed). The assumption in these...