Manager incentives are viewed as being better aligned with those of shareholders when they have an ownership stake in the firms they manage. However, manager ownership can exacerbate agency problems by better enabling managers to pass shareholder resolutions. We outline a model of strategic...

How does the market value complex structured-credit securities? This issue is central to understanding the current financial crisis and identifying effective policy measures. We study this issue from a novel perspective by contrasting the valuation of CDO equity with that of bank stocks. This is...

We use contract negotiation data to study how leverage affects the interaction between firms and an important non-financial stakeholder, labor unions. Consistent with the idea that leverage diminishes the bargaining position of labor, we find that unions are less likely to strike when a firm has...

We document that labor relationships at founder firms are less acrimonious than at non-founder firms. Founder-firms are less likely to be unionized and employees at non-unionized founder-firms are less likely to attempt to unionize. Further, among firms that are unionized, labor at founder-firms...

The Electoral College creates incentives for politicians and regulators to direct policy favors to so called "battleground" or "swing" states (the median voters in presidential elections). We examinewhether regulators treat battleground states favorably by examining whether the EPA is less...

This paper examines whether founder family successions lower performance in large US firms. We find no significant decreases in either accounting performance or firm value, and instead find evidence that both are improved. Consistent with this, we present evidence that family successions are...

The political environment in which a firm operates affects a firm's optimal capital structure. Politicians frequently derive a political benefit from imposing costs on firms. Nevertheless, politicians do not want firms to become financially distressed or enter bankruptcy as this affects their...