One influential criticism of the stock market oriented U.S. financial system is that its excessive focus on short term quarterly earnings forces public firms to behave in a myopic manner. We hypothesize that if capital markets pressure listed firms to be myopic in a way that impacts efficiency,...

Why do firms go public? Despite the existence of many theories addressing this question, lack of data on private firms before they are public hampers our ability to test these theories. We circumvent this challenge by testing reverse predictions of going public theories using firms' decisions to...

Recent evidence indicates that cycles in valuation and managers ability to time the market partly explain the pattern of many corporate financing activities, such as equity issuances and mergers. In this paper, we challenge the importance of market timing in driving financing waves by examining...

The use of stock repurchases has fluctuated dramatically over the last two decades: Aggregate repurchases peaked in 1999, when the use of repurchases came close to surpassing the use of dividends, and reached a low in 1991, when the repurchases amounted to only a quarter of dividends. Though...

This paper investigates how firms determine the capital structure of a subsidiary that is divested in a spin-off. In a spin-off, the parent divides the assets of the firm and chooses the capital structure for the new, stand-alone entity. Unlike the firms in other capital structure studies, the...

We develop and test a new theory of security issuance that is consistent with the puzzling stylized fact that firms issue equity when their stock prices are high. The theory also generates new predictions. Our theory predicts that managers use equity to finance projects when they believe that...

We investigate how corporate governance impacts firm value by comparing the value and use of cash holdings in poorly and well governed firms. We show that governance has a substantial impact on value through its impact on cash: $1.00 of cash in a poorly governed firm is valued at only $0.42 to...