This paper examines the influence of dividend covenants in corporate bonds on investment and operating performance. Prior literature analytically demonstrates that by limiting dividend distribution to shareholders, dividend restrictions effectively place a minimum on investment expenditures...

We examine whether accounting quality is associated with efficient investments in labor. Consistent with high quality accounting mitigating market frictions that lead to sub-optimal levels of investment, we find evidence that abnormal net hiring (measured as the absolute deviation from net...

We examine the role of financial reporting quality in facilitating corporate employment. Labor creates operating leverage due to wage rigidity and lacks collateral value, both of which increase credit risk and the importance of information in debt markets. We use firms' predetermined debt...

We study labor unions, an important stakeholder group that has not been a focus of the earnings smoothing literature. We posit that managers strike a balance between sheltering resources from employees’ profit sharing demands and catering to employees’ aversion to downside risk by smoothing...

We examine whether operating inflexibility posed by labor unions affects goodwill impairment. We predict such inflexibility hinders resource reallocation after acquisition, thereby preventing the acquiring firm from realizing synergies included in goodwill. Consistent with this prediction, we...