Previous studies show that the unsolicited ratings of S&P and Fitch are lower than the solicited ratings assigned by these two agencies. The unsolicited ratings of S&P and Fitch are based on publicly available information for a firm. However, no previous study has examined the unsolicited...

Using a stochastic volatility option pricing model, we show that the implied volatilities of at-the-money options are not necessarily unbiased and that the fixed interval time-series can produce misleading results. Our results do not support the expectations hypothesis: long-term volatilities...

This paper examines debt-free firms. We find that favorable equity market valuation and borrowing constraints contribute to these firms' extreme debt conservatism. Small debt-free firms with little access to credit markets are seen to raise equity while paying high dividends. Large debt-free...

If firms adjust their capital structures toward targets, and if there are adverse selection costs associated with asymmetric information, how and when do firms adjust their capital structures? We suggest a financing-needs-induced adjustment framework to examine the dynamic process by which firms...

Theories suggest that stock-warrant units are used as mechanisms for reducing agency costs or signaling firms' good future prospects as a form of sequential equity financing. While there is evidence of less severe price reaction to unit seasoned equity offering announcements than to share...

We examine seasoned offerings of common stock and stock-warrant units to test predictions of recent theories of security issuance based on sequential financing and information signaling. We specify and test a simultaneous equations model involving the choice of shares versus stock-warrant units...

We examine how the demand for financial flexibility affects firms' capital structure decisions. We find that: developing firms that are in the phase of financial flexibility building have low leverage; growth firms that are in the phase of utilizing financial flexibility to fund growth...

We show that the implied cost of capital (ICC) and factor model-based proxies (FMPs) of cost of equity have negative (positive) association with corporate investment and external financing. ICCs show negative association with corporate investment and external financing by capturing the discount...

I develop a hypothesis that predicts nonlinear patterns of leverage and cash holdings over firms' financial flexibility demand stages. The hypothesis also predicts distinctive financing patterns over the financial flexibility demand stages. The empirical results support the hypothesis:...