This study investigates the predictability of stock market returns using a novel corporate investment measure that captures the lumpiness of firm-level investment. We find that the proportion of firms with investment spikes ("spike") is a strong predictor of excess stock returns. Specifically,...

This study proposes a generalized partial adjustment model of dividends in which managers set target dividends based on adaptively-formed earnings prospects. We show that firms adjust dividends to their target payouts much faster than previously documented. When managers form future earnings...

Using a semiparametric smooth-coefficient partial adjustment model, this study finds evidence for asymmetric peer effects on capital structure adjustment speeds between overlevered and underlevered firms. Overlevered firms' adjustment speeds and peer firm shocks have a U-shaped relationship,...

This study investigates the relationship between product market competition and the market value of innovation using firm-level patent data of US firms over the period 1977-2005. We find that there is an inverted U-shaped relationship between competition and the value of innovation. Furthermore,...

We find that a firm facing higher uncertainty has a higher value of cash. This effect is attributed to the increased value of the option to wait and see as well as the aggravated financial constraints and mitigated agency conflicts

This study examines the impact of corporate social responsibility (CSR) on the quantity and economic value of innovation, finding significant positive effects. A one-standard-deviation increase in the lagged CSR score results in 6.18 more patents being granted to an average firm in a year and...

Using the split-share structure reform in China, we examine the effect of stock liquidity on investment efficiency. We find that enhanced stock liquidity leads to more efficient investment and the effect is much more pronounced for under-investing firms compared to over-investing firms. We also...

This paper documents that enhanced stock liquidity increases the propensity of firms to raise debt capital. The positive effect of liquidity on a debt issuance propensity is much stronger in firms with greater default risk. The reduction of the cost of debt driven by enhanced liquidity is much...

Using a unique dataset of Korean firms, we demonstrate that the effects of public listing on trade credit demand are heterogeneous between chaebol and non-chaebol firms. While we find a significant negative relationship between public listing and trade credit demand for non-chaebol firms, we do...

We examine the effect of stock liquidity on the choice between debt and equity financing. Using three quasi-natural experiments, we show that increased stock liquidity increases firms' propensity to finance using debt. In addition, we document that liquidity reduces the cost of debt finance....