We examine a large sample of mergers involving earnout payments made by bidders to target shareholders. Our findings suggest that earnouts serve two non-mutually-exclusive functions: as risk reduction mechanisms against misvaluation of high asymmetric information targets, and as retention...

Earnings paths are proxied by analyst forecasts leading up to the earnings announcement. We find that after controlling for information content, as revealed by the earnings announcement, security returns measured over the entire quarter are affected by the path of expected earnings. We uncover...

We investigate empirically the nature of Japanese executives' compensation contract. The principal issues examined are: the extent Japanese executives are rewarded for performance both in the short term and in the long term, the role of alternative governance and control mechanisms unique to...

The paper argues that there is a need for the formal treatment of personal bankruptcy costs in the finance literature. The need arises out of the relevance of such costs to both corporate and personal financing decisions. We show that 1) personal bankruptcy costs (like personal taxes) are...

We investigate the role of affect on asset prices through a natural experiment inherent in the designation of dual-class IPOs and its impact on IPO underpricing. We show that issuers of dual-class IPOs could and do take consumer psychology into account and manage to sell inferior securities at...

We examine how capital structure considerations affect acquisition pricing and valuation. We find that debt capacity improvement is value-enhancing for all acquirers when they gradually reveal their growth opportunities to the market. This is reflected in the long-run stock market returns, both...

Research in behavioral corporate finance has accumulated to the point that it may now be a viable contender as an alternative to traditional corporate finance. This review consists of three parts. First, I discuss the foundations behind these two competing theories. I clarify concepts such as...

Where can one systematically find research ideas? I propose a scheme to classify and broadly generalize the sources of inspiration for research topics, with emphasis on corporate finance. In the process, I propose 100 new research topics awaiting the brave and persistent

The volume of acquisitions involving privately held firms has far surpassed that of publicly traded firms in recent years; yet this segment of the take-over market remains largely unexplored. In analysing the unique features of private target take-overs, we compare the mergers and acquisitions...

An examination of 268 CEO appointments in U.S. firms indicates that, on average, appointment of a better-quality CEO (a CEO who receives a pay premium ex-ante) is accompanied by an immediate positive revaluation of stock prices, and is followed by an improvement in firm performance. This...