In this study, we show that when a firm needs external financing, information quality has real effects via financing contracts on the firm's input to influence its operational outcome. Interestingly, we find that higher information quality decreases overall efficiency. Our analysis highlights...

In this study, we show that when a firm needs external financing, information quality has real effects via financing contracts on the firm's input to influence its operational outcome. Interestingly, we find that higher information quality decreases overall efficiency. Our analysis highlights...

We develop a model to show how shareholder-creditor agency conflicts interact with accounting measurement rules to influence the design of bank capital regulation. Relative to a benchmark autarkic regime, higher capital requirements mitigate inefficient asset substitution, but exacerbate...

This paper studies how tax shields of loss-making entities affect resource allocation within business groups. Evidence from a large international sample and a single-country regression discontinuity design suggests that groups avoid their member firms' defaults when tax shields from...

In the wake of the 2008 financial crisis, Robert Engle and colleagues at New York University developed the NYU Stern Systematic Risk Model (SRISK), a market-based substitute for regulatory measures of systemic risk of financial institutions. This study identifies four shortcomings of SRISK....

We examine how executive equity risk-taking incentives affect firms' choice of debt structure. Using a longitudinal sample of U.S. firms, we document that when executive compensation is more sensitive to stock volatility (i.e., has higher vega), firms reduce their reliance on bank debt...

This paper studies how the informational content of dividends is affected by leverage. While higher dividends convey good news at low levels of leverage, dividends become a bad signal when leverage is high. Quantitatively, a dividend increase is predicted to have a positive stock price reaction...

Lending decisions of banks is a function of accounting information of borrowing firms, however, in contemporary times the quality of their accounting information is not encouraging to be used as a yardstick in taking lending decision. Against this backdrop, we investigated the impact of...

We examine uniform and discretionary regimes for reporting information about firm performance from the perspective of a standard setter, in a setting where the precision of reported information is difficult to verify and the reported information can help coordinate decisions by users of the...

This paper examines the effect of Korea’s fair disclosure regulation on the timeliness and informativeness of earnings announcements. The present regulation for Korean listed firms requires that if a company's sales revenue, operating income (or loss) and net income (or loss) have changed by...