This paper studies the sentiment among financial analysts around announcements of mergers and acquisitions (Mamp;As). Analyst sentiment is measured using revisions of consensus earnings forecasts. We find that bidders are more likely to offer stock rather than cash in their takeovers when...

This paper studies the variation in the value of diversification across time under various capital market conditions. We find that the value of conglomerates increases relative to focused firms when external capital is more costly at the aggregate level. We also find that such an increase is...

Practitioners have noted that firms tend to increase their product market advertising prior to an IPO or a seasoned equity issue. Further, recent empirical evidence indicates that firms with a greater level of product market advertising have lower bid-ask spreads and a larger number of both...

Mandatory convertibles, which are equity-linked hybrid securities that automatically convert to equity on a pre-specified date, have become an increasingly popular means of raising capital in recent years (about $20 billion worth issued in 2001 alone). This paper presents the first theoretical...

Most finance theories suggest that debt and leases are substitutes. However, the empirical findings on the substitutability between leases and debt are mixed. This paper empirically re-investigates this relationship, and differs from the previous literature in three aspects. First we construct a...

We develop a new rationale for the performance and value improvements of firms following corporate spin-offs. We consider a situation of a firm with multiple divisions, where incumbent management may have differing abilities for managing various divisions. Giving up control to a rival with...

We develop a non-tax rationale for leasing in a double-sided asymmetric information setting, and analyze how various contractual provisions in leasing contracts arise in equilibrium. In our model, a manufacturer of capital goods has private information about their quality; entrepreneurs (users...

We analyze the interaction between a firm's product market advertising and its corporate financing decisions. We consider a firm that faces asymmetric information in both the product and financial markets and that needs to raise external financing to fund its growth opportunity (new project)....