We provide experimental evidence that relaxing margin restrictions to allow more short selling can exacerbate overpricing, even though it reduces equilibrium price levels. This is because smart-money traders initially profit more by front-running optimistic investor sentiment than by...

We investigate the issue of voluntary disclosure in multi-audience settings by focusing on the electric utility industry as it transitions toward deregulation. We consider three target audiences: industry regulators, capital market participants, and product market competitors. As predicted, we...

We provide experimental evidence that relaxing margin restrictions to allow more short-selling can exacerbate overpricing, even though it reduces equilibrium price levels. This is because smart-money traders initially profit more by front-running optimistic investor sentiment than by...

This paper provides evidence linking corporate governance mechanisms to higher bond ratings and lower bond yields. Governance mechanisms can reduce default risk by mitigating agency costs and monitoring managerial performance and by reducing information asymmetry between the firm and the...

This paper provides evidence linking corporate governance mechanisms to higher bond ratings and lower bond yields. Governance mechanisms can reduce default risk by mitigating agency costs and monitoring managerial performance and by reducing information asymmetry between the firm and the...

Using realized earnings over long periods of time, we investigate errors in earnings expectations implied by stock prices of firms. We compute lifetime earnings for 16,386 (3,711) domestic firms that started trading after (existed as of) January 1, 1975 for the years 1975-2019 and compare such...

This paper explores the potential role of anti-takeover provisions (ATPs) in long-term value creation. Using multiple research designs, we find that long-term focused (innovative) firms benefit from takeover protection. We also find that the protected innovative firms are less likely to engage...