A dynamic model featuring a stochastic technology frontier shows significant impact of technology adoption for asset prices. In equilibrium, firms operating with old capital are riskier because costly technology adoption restricts their flexibilities in upgrading to the latest technology, making...

In this note, we show that the key driver of the 2019:Q1 increase in the leverage ratio appears to be a change in accounting rules – which requires the inclusion of operating leases as financial liabilities on U.S. corporations' balance sheets – and also provide a methodology for adjusting...

Among stock market entrants, more firms over time are R&D–intensive with initially lower profitability but higher growth potential. This sample-selection effect determines the secular trend in U.S. public firms' cash holdings. A stylized firm industry model allows us to analyze two competing...

We develop a model of equity financing risk (EFR; i.e., risky equity issuance costs) to study the joint effects of precautionary savings and research and development (R&D) investments on expected returns. Our evidence confirms the model: (1) financial slack (i.e., liquid assets relative to R&D)...

We study the motives for long-term debt issues. The primary use of debt issue proceeds is repurchasing noncurrent debt. These repurchases combined with rollovers consume 57% of proceeds, so most debt issues are not used for investment and operations and do not impact leverage. Regardless of...

We compile a comprehensive dataset of initial coin offerings (ICOs) from 19 data sources including 11 ICO aggregators. We alleviate severe limitations of available ICO data by performing the first systematic analysis of ICO data quality and use our dataset to study determinants of ICO funding...

This paper proposes a risk-based explanation of the negative relation between credit spreads and expected equity returns found in the data. In a model where issuing equity is costly and debt has a tax advantage, firms optimally choose a lower net leverage if their cash flows are more correlated...

We investigate the role of business dynamism in the transmission of monetary policy by exploit- ing the variation in firm demographics across U.S. states. Using local projections, we find that a larger fraction of young firms significantly mutes the effects of monetary policy on the labor market...

We demonstrate theoretically and empirically that strategic considerations are important in shaping cash policies of innovative firms. In our model, firms compete in product markets with uncertain structure using cash as a commitment device to invest in innovation. We show that firms'...

Using daily credit default swap (CDS) data, we find a positive relation between corporate credit risk and unexpected monetary policy shocks during FOMC announcement days. Positive shocks to interest rates increase the expected loss component of CDS spreads as well as a risk premium component....