I provide evidence that U.S. firms in more corrupt areas have lower investment expenditure than firms in less corrupt areas. A one standard deviation increase in corruption rate is associated with a 8.6% decline in a firm's investment from the median. Firms with a high degree of geographical...

Based on a unique arrangement of trading and disclosure times around earnings announcements in the Chinese stock market, we provide evidence of a striking overnight-intraday disparity in terms of the reaction to earnings news. Specifically, we find that the overnight period exhibits a strong and...

We investigate how the mandatory adoption of International Financial Reporting Standards (IFRS) by publicly listed firms in the European Union affects peer private firms. We find that private firms’ capital investment decreases significantly after the IFRS mandate, relative to public firms....

Considerable research focuses on the aggregate impact of debt financing. We show that equity is empirically more important for firm growth than generally understood. An extra dollar of equity issuance is associated with an extra $0.93 of real assets, whereas an extra dollar of debt issuance is...

The spectacular rise of ESG usage in investment decision-making made public companies’ environmental and social attitudes critical more than ever as their shares are sold and bought in stock exchanges. Even though the enlightened shareholder value approach (ESV) by Section 172 (S172) of the...

Empirical evidence suggests that insurance groups allocate capital to members with better performance or growth prospects and use internal capital markets to protect franchise value of less capitalized members. We propose and test an additional motivation for the use of internal capital markets...

In this paper, we study how legal uncertainty affects economic activity. We develop a parsimonious model with different types of legal uncertainty that reduce economic activity and that can be classified as idiosyncratic (i.e., diversifiable) or systematic (i.e., nondiversifiable). We test the...

One of the most important discussions in economic research is about how to provide the right incentives to individuals. Usually when a regulator defines a rule, it has to deal with some tradeoff. This paper proposes to study a specific trade-off that emerges with the possibility of reversal of...

Articles in the top finance journals largely ignore the potential of outlier-induced bias in empirical research. When finance researchers do address outliers they use techniques that tend to cause additional problems. We illustrate the problems via simulations as well as replications of studies...

The International Accounting Standards Board and the Financial Accounting Standards Board are working together to require that the present value of future lease payments for most leases currently classified as operating leases be recorded on lessees' balance sheets as both an asset and a...