This paper examines the effects of improvement in creditors' rights protection on firms' financing choices and securities issuance. To address these issues, I exploit exogenous variation in creditors' rights protection induced by the staggered adoption of anti-recharacterization laws by some...

In a dynamic continuous-time model, we examine the impact of a manager-shareholder conflict over the choice of investment risk on firm value and optimal capital structure. The manager's optimal investment risk policy is substantially different from the policy that maximizes equity or total firm...

I examine the effect of investment frictions on leverage dynamics, using a model of the firm whose investments are 1) indivisible and lumpy, and 2) subject to time-to-build, which is a time lag between when investment expenditures are made and when the investment begins to generate cash. The...

This paper presents a continuous time model of a firm that can dynamically adjust both its capital structure and its investment choices. The model extends the dynamic capital structure literature by endogenizing the investment choice as well as firm value, which are both determined by an...

Valuation Methods and shareholder value creation is a complete book about business valuation and value creation. The book explains the nuances of different valuation methods and provides the reader with the tools for analyzing and valuing any business, no matter how complex. With 631 pages...

The article discusses the history and logic of the development of the concept of economic profit. Historically, the understanding the essence of the residual income of the business depends on the level of development of the systemic organization of economy. Complication of systemic mechanisms of...

The German Bundesgerichtshof (Federal Court of Justice) has recently passed a judgement in which it held board members of a company liable for oral information given to investors during a quot;road showquot;. After the company had decided on an increase in its capital, the members of its...

Contingent future payments have gained a solid reputation as fundamental ingredients of business acquisition transactions. Earn-outs specifically are a species of contingent future payments that have proved helpful in a plethora of recent merger deals. An earn-out is payment for performance...

Using a dynamic model of strategic bargaining between equity and debt holders following default, we analyze the impact of shareholder bargaining power on the investment effects of debt overhang. Our empirical tests utilize a new measure of debt overhang wedge based on default probabilities...

Legal rules play a powerful but understudied role in security design. This article presents two new theoretical results about the design of debt contracts. The results derive from the premise that firms must avoid legal insolvency when issuing new debt because insolvency at issuance would...