We find that co-opted boards facilitate more erratic and arbitrary decision-making, contributing towards default risk. A one standard deviation increase in co-option increases default risk by 11% relative to normal levels. Supporting the notion that co-option makes decision-making more erratic,...

We investigate whether political similarities between credit rating agencies (CRAs) and bond issuers impact credit rating quality. We find that a higher degree of similarity of political affiliation leads to a decrease in timeliness and accuracy of downgrades prior to default events. Our finding...

Using novel and comprehensive data on the timing of subsidiary establishment, we examine how firms' foreign expansions influence their ability to innovate. We find that after an expansion, especially into a highly innovative country, a firm significantly increases innovation output and its...