We exploit an exogenous, universal increase in discount rates mandated by the Moving Ahead for Progress Act (MAP-21) to identify the impact of pension overhang on investment. We find that firms with large unfunded pension liabilities increase investment by 13% after the MAP-21 induced decrease...

Using a comprehensive sample of 2,585 bankruptcies from 1990 to 2019, we benchmark the performance of various machine learning models in predicting financial distress of publicly traded U.S. firms. We find that gradient boosted trees outperform other models in one-year-ahead forecasts. Variable...

We review the recent theoretical and empirical literature on debt covenants with a particular focus on how creditor governance after covenant violations can influence the borrower's corporate policies. From the theoretical literature, we identify the key trade-offs that help explain the observed...

We review the recent theoretical and empirical literature on debt covenants with a particular focus on how creditor governance after covenant violations can influence the borrower's corporate policies. From the theoretical literature, we identify the key trade-offs that help explain the observed...

Based on an analysis of the agency risk for bondholders from managerial entrenchment and fraud, and using an efficient contracting framework, we derive and test refutable hypotheses about the influence of managerial moral hazard on the use of bond covenants. Entrenched managers can both...

Based on an analysis of the agency risk for bondholders from managerial entrenchment and fraud, and using an efficient contracting framework, we derive and test refutable hypotheses about the influence of managerial moral hazard on the use of bond covenants. Entrenched managers can both...

Based on an analysis of the agency risk for bondholders from managerial entrenchment and fraud, we derive and test refutable hypotheses about the influence of managerial agency risk on bond covenants, using a comprehensive database of corporate bonds from 1993-2007. Managerial entrenchment and...