Firms that score low on environmental, social, and governance (ESG) indicators exhibit higher expected returns. This negative ESG premium might be driven by higher risk associated with low ESG scores, or it could signal investors' preferences for firms with high ESG scores. The first driver...

We present a model to test the null hypothesis that firms organize their corporate governance arrangements optimally given the constraints they face. Following the literature, the model rejects the null if the conditional correlation between governance and performance is significantly different...

Using a very large data set with more than 9,700 stocks listed on NYSE, AMEX and NASDAQ, we analyze overnight price jumps and report short-term investor overreaction to information shocks and document return reversal and predictability up to five days. For negative and positive overnight jumps,...

We examine the interaction between equity returns and firms’ financing policies in a stochastic Ramsey model with heterogeneous firms. Motivated by empirical evidence, firms maintain stationary financial leverage ratios by issuing debt. We present a novel closed-form solution to this class of...