Tests for liquidity constraints typically rely on investment models which do not fully incorporate bankruptcy risk. By explicitly adding bankruptcy risk to a model of investment I show that prior findings of liquidity constraints may instead be finding bankruptcy risk. Empirically, bankruptcy...

We provide a firm level analysis of the impact of capital market liberalization in 18 emerging markets. We find a larger increase in returns during liberalization and a larger decrease in returns after liberalization than previously found using indexes. While slightly more than half of the firms...

We examine whether state laws impact the use of debt covenants using a sample of U.S. public bond issues from 1987 to 2004. We consider variation in state laws with respect to the minimum asset/debt ratio necessary for a payout and with respect to antitakeover statutes. We find that firms...

We examine the impact of state laws on capital structure for a sample of U.S. manufacturing firms. Firms incorporated in states with stronger payout restrictions use less debt, while antitakeover statutes do not significantly reduce long-run leverage. Correcting for the endogenously determined...

We provide a firm level analysis of the impact of capital market liberalization in 18 emerging markets. Consistent with models of international asset pricing, we find that firms' stock returns increase during liberalization and that a majority of firms have lower mean returns and lower dividend...

We describe a method for investors to optimally choose whether to place a market or a limit order, and at what price to place a limit order. We base our analysis on a risk averse investor's expected utility maximization, and allow for a continuum of investor information, risk aversion, and...

Using a GARCH approach, we estimate a time-varying two-factor international asset pricing model for weekly equity index returns of 16 OECD countries. A trade-weighted basket of exchange rates and the MSCI world market index are used as risk factors. We find significant currency risk exposures in...

In this empirical study I examine the factors correlated with capital structure in the United States, Japan, United Kingdom, France, and Germany. Although both mean leverage and many firm factors appear to be similar across countries, some significant differences remain. Specifically,...

This paper develops a symmetric information model of a new firm which incorporates a constraint on dividend payments known as a balance sheet test. This test solves moral hazard problems that arise in credit markets where complete contracting over future actions is not possible. This constraint...

We examine the probability of exit for different types of investors in the syndicated loan market, as well as how the entry and exit of different types of investors is associated with changes in loan characteristics. Nonbanks, particularly CLOs, closed-end funds, and mutual funds, are more...