Williamson's theory of hierarchy is used to show that the widespread and, before now, unexplained corporate practice of establishing captive finance subsidiaries may be understood as an instance of multidivisonal-form reorganization. It is argued that such reorganization enhances internal...

Outlines the development of duration as a risk management tool for fixed income securities, shows how it is calculated and gives examples to illustrate its use in assessing risk exposure and immunizing bond portfolio returns against interest rate risk. Cites research confirming its effectiveness...

This case study explores which variables—macroeconomic, institutional, and capital controls—are most important in explaining cross-country differences in bond market development. It uses the ratio of amount of local currency bonds outstanding over GDP as a measure of bond market development...

We study whether firm name affects investor attention and thereby firm valuation. Some Chinese firms listed on U.S. stock exchanges have the word “China” or “Chinese” included in their company names (“China-name stocks”), whereas others do not (“non-China-name stocks”). During...

Equity market liberalizations open up domestic stock markets to foreign investors. A puzzle in the literature is why developing countries exhibit relatively small financial impacts associated with liberalizations. We use cross-firm variation in corporate governance at the time of the official...

We investigate the stakeholder theory of capital structure from the perspective of a firm's relationships with its employees. We find that firms that treat their employees fairly (as measured by high employee-friendly ratings) maintain low debt ratios. This result is robust to a variety of model...

We examine two competing views regarding the impact of competition among credit rating agencies on rating quality: the view that rating agencies do not sacrifice their reputation by inflating firm ratings and the view that competition among rating agencies arising from the conflict of interest...

We study the impact of board reforms implemented in 40 countries worldwide on corporate dividend policy. Using a difference-in-differences analysis, we find that firms pay higher dividends following the reforms. The increase in dividend payouts is more pronounced for firms with weak board...

We examine whether differences in legal protection affect the size, maturity, and interest rate spread on loans to borrowers in 48 countries. Results show that banks respond to poor enforceability of contracts by reducing loan amounts, shortening loan maturities, and increasing loan spreads....