The stakeholder theory of capital structure proposed by Titman (1984) argues that firms will take into account the nonfinancial stakeholders' preferences when making capital structure decisions. In particular, firms selling specialized products will choose a lower leverage ratio. We propose a...

Using the staggered introduction of regional specialized debt recovery courts as a quasi-natural experiment, we estimate the impact of bankruptcy resolution on the financing cost of corporate bonds in China. We find that the introduction of specialized courts reduces the bond financing cost by...

Optimal investment of firms implies that expected stock returns are tied with the expected marginal benefit of investment divided by the marginal cost of investment. Winners have higher expected growth and expected marginal productivity (two major components of the marginal benefit of...

Optimal investment of firms implies that expected stock returns are tied with the expected marginal benefit of investment divided by the marginal cost of investment. Winners have higher expected growth and expected marginal productivity (two major components of the marginal benefit of...

We study empirically the changes in economic fundamentals for firms with recent stock price momentum. We find that: (i) winners have temporarily higher dividend, investment, and sales growth rates, and losers have temporarily lower dividend, investment, and sales growth rates; (ii) the duration...

Historical market-to-book and past returns have been shown to explain current leverage. Prior studies attribute the evidence to market timing or passive management. This study shows that with the presence of time-varying targets and adjustment costs, historical variables have a significant...

This study investigates the different roles played by two components of trading volume, informed-trading and liquidity-trading, in the volatility-volume relation at the aggregate level. Using transaction data and an extended trading model of Easley, Kiefer, O'Hara and Paperman (1996), I estimate...

An initial public offering (IPO) is one time when a company can legally lsquo;bribe' institutional investors to pay attention to it ndash; investors that regularly attend road shows and give reliable feedback can expect allocations of underpriced shares in hot offerings. Our model generates a...

Chinese local governments have issued a large number of local government financing vehicle (LGFV) bonds since 1994 when the Budget Law was promulgated, where local governments were prohibited from raising debt on their own. Although LGFV bonds are implicitly backed by governments, there has been...

The neoclassical theory of investment implies that expected stock returns are tied with the expected marginal benefit of investment divided by the marginal cost of investment. Winners have higher expected growth and expected marginal productivity (two major components of the marginal benefit of...