We examine how division managers' human capital affects internal capital allocation using a hand-collected data set of divisional managers at S&P 1,500 firms. Based on a novel measure of division-manager ability, we show that more able division managers receive substantially larger capital...

Debt contracting creates demand for information by lenders for several related but distinct decisions. Lenders gather information ex ante for screening the borrower. Lenders also collect information when the contract is in effect to assess the suitability of the initial contract terms. Finally,...

Recent years have seen a sharp decline in the use of balance sheet-based covenants in private debt contracts. I hypothesize that changes in accounting standards can explain part of this decline. Standard setting has shifted towards a “balance sheet approach”, which I predict has made the...