We examine shareholder litigation and the price and non-price terms of bank loan contracts. After the lawsuit filing, defendant firms pay higher loan spreads, up-front charges, experience more financial covenants, and are more likely to have a collateral requirement. These findings are...

This study investigates the relation between audit regulation and the cost of equity capital. While a relation is intuitively appealing, there is a general lack of empirical evidence because changes in audit regulation are frequently accompanied by other major regulatory changes. We exploit...

Exploiting the staggered adoption of universal demand (UD) laws as exogenous shocks to filing derivative lawsuits, we find that weakened shareholder litigation rights cause a significant increase in the cost of debt. Deteriorated corporate governance, increased information asymmetry, and...

A critical question faced by any sovereign seeking to raise funds in the bond market is whether to issue the debt under foreign or local parameters. This choice determines other key characteristics of any bond issue such as which banks, lawyers, and investors will be involved. Most important...

This chapter discusses distress-triggered liabilities: contingent obligations of a corporate debtor that are likely to be triggered by the debtor's own financial distress. Three common examples of such liabilities are loan default penalties, loan prepayment fees such as make-whole premiums, and...

And hence, it is precisely such active traders that may be shown not to have relied on the integrity of the market price or on the allegedly false statement but nevertheless remained in the class through settlement (because of the presumption at the certification stage) that might collect the...

This Article presents a theory of the corporate governance costs of private equity. In doing so, it challenges the common view that private equity's governance structure has resolved, or at least significantly mitigated, one of the fundamental tensions in corporate law, that is, the conflict...

We investigate how a borrower’s adverse climate-related incidents affect bank loan contracting. Using a sample of 2,622 publicly traded US firms over the period 2000–2016, we construct event-based measures of corporate climate performances based on firm-level adverse climate incidents such...

Banks use internal models to optimize risk weights and better account for the specific risk of each asset class. As the choice of a set of risk weights directly amounts to affecting the regulatory capital ratio, economic theory suggests that banks should optimize their risk weights also with...

This paper examines the impact of labor regulations that restrict firms' flexibility to adjust labor on the cost of corporate bank loans. Using within-country variation in employment protection legislation across 25 countries, I find that increases in employment protection lead to higher loan...