Using variations in local real estate prices as exogenous shocks to corporate financing capacity, we investigate the causal effects of financial flexibility on cash policies of US firms. Building on this natural experiment, we find strong evidence that increases in real estate values lead to...

This study asks whether industry merger waves can best be explained as efficient reactions to industry shocks or as clusterings of distortional activity. Waves create wealth overall, in contrast to non-wave periods in the same industries. Bidders in waves are less likely to display...

Managers choose to spend corporate resources to purchase directors' and officers' liability insurance, which protects directors and officers from personal financial liability in lawsuits brought against the firm and its directors and officers. We investigate whether the amount of Damp;O...

I investigate the nature of the incentives that lead outside directors to serve stockholders' interests. Specifically, I document the effect of a takeover bid on target directors, both in terms of its immediate financial impact and its effect on the number of future board seats held by those...

The acquisition behavior of cash-rich firms is examined for evidence of free cash flow-related behavior. A model of cash management is developed and used to identify a sample of cash-rich firms. The model provides a benchmark quot;normalquot; level of cash reserves based on industry...

We hypothesize that the payout method chosen to distribute a cash flow shock is primarily determined by the permanence of the shock. Dividend increases will be observed following cash flow shocks with a relatively large permanent component while repurchases will be used to distribute shocks that...

We identify important conflicts of interests among shareholders and examine their effects on corporate decisions. When a firm is considering an action that affects other firms in its shareholders' portfolios, shareholders with heterogeneous portfolios may disagree about whether to proceed. This...

This paper introduces the impact of debt misvaluation on merger and acquisition activity. Debt misvaluation helps explain the shifting dominance of financial acquirers (private equity firms) relative to strategic acquirers (operating companies). The effects of overvalued debt might seem limited...

We analyze a sample of 72 IPO firms that went public between 1992 and 1996 for which we have detailed proprietary information about the amount and cost of D&O liability insurance. If managers of IPO firms are exploiting superior inside information, we hypothesize that the amount of insurance...