Debt covenant violation alters firm dynamics, providing creditors with the right to demand repayment, and via that right, influence firm actions. We provide evidence consistent with creditors employing that channel to influence CEO compensation. Using regression discontinuity analysis, we show...

The paper models a firm's dynamic decisions: i) whether to issue a callable or non-callable bond; ii) when to call the callable bond; and iii) whether to refund it when it is called. We argue that callable bonds can be used to hedge investment risk, since they can resolve risk shifting problem...

This study documents that stability of institutional ownership plays an important role in determining the cost of debt. After controlling for other determinants of the cost of debt, and correcting for the endogeneity of institutional ownership stability, three major results are uncovered; there is...

Binding foreign ownership limits fragment stock trading in Thailand into distinct markets for locals and foreigners. Foreigners (locals) who buy on the local (foreign) board lose dividends and voting rights (pay a price premium). We observe a surprising amount of cross-market activity among...

We document beneficial associations between openness to foreign equity investors and the information environment in emerging stock markets. Openness is reflected in legal, regulatory, and cross-listing events, the fraction of stock available to foreign investors, and the size of U.S. portfolio...

Does more leverage always worsen the debt agency problem? This paper presents a unified analysis that accounts for both risk-shifting and under-investment debt agency problems. For firms with positive marginal volatility of investment (defined as the change in cash flow volatility corresponding...

We examine market responses to earnings announcements in Singapore and Thailand, where shares restricted to local investors trade alongside otherwise identical shares available to foreigners. Our evidence is consistent with foreigners having superior information processing ability, rather than...

Using staggered climatic disasters in the U.S, we find that earnings forecasts by analysts who experienced a major climatic disaster become less accurate than those by the unaffected analysts within three months after the disaster due to distracted attention. Stock prices respond less strongly...

We investigate how political ideology affects corporate innovation by using the expansion of Sinclair Broadcasting, the largest conservative media network in the U.S., as a plausible shock to the local ideology. We find that innovation quantity (patent counts) and quality (citation counts per...

In this study, we investigate the relationship between various dimensions of diversification and the cost of debt for publicly traded bank holding companies (BHCs). We find that both domestic geographic diversification of deposits and diversification of assets lead to a lower bond yield-spread....