Previous research attributes long-run reversals to investor over-reaction or tax-motivated trading; we offer an alternative explanation based on aggregate funding conditions. Our evidence shows that prices rebound for stocks that have performed poorly over the past several years (Losers);...

This paper analyzes security-market returns relative to the political party of the president, the Federal Reserve's monetary policy, the year of the president's term, and the state of political gridlock. Contrary to prior studies, which evaluated the influences separately, we jointly evaluate...

The personal traits of chief executive officers (CEOs) have been found to influence corporate policy decisions. We examine the impact of past professional distress experiences on payout policy. We hypothesize that CEOs experiencing a distress event in their past career, before becoming CEO,...

Recent theoretical models (e.g., Carlson, Fisher and Giammarino, 2004) predict an association between the book-to-market (BE/ME) ratio and operating leverage in the cross-section. Consistent with these models, we find a strong positive association between BE/ME and the degree of operating...

Calling firms experience increases in systematic business risk following conversion-forcing calls of convertible debt. The increases in business risk are sufficiently large to offset the reductions in financial risk coming from the reduction in financial leverage following the call. As a result,...

Some warrants are issued with a scheduled increase in their exercise price. This increase, referred to as a quot;step upquot; in exercise price, occurs after the warrant is issued but prior to its expiration. We examine the price behavior of warrants and common stock at the scheduled step up...

We examine warrant agreements and identify three provisions of these contracts that allow managers to time the raising of capital: the right to call the warrants, to extend the life of the warrants, and to lower the exercise price of the warrants. We argue that these provisions are costly yet...

We provide new evidence on the sequential financing explanation for the use of warrants. Consistent with sequential financing, capital spending starts increasing in the year of the call and peaks three years after the call. In addition, both equity and debt financing increase significantly in...

In 2019, MIT hosted a 75th birthday symposium in honor of Robert C. Merton. The event included presentations by students and colleagues explaining the influence Merton has had on the profession and on their ideas. Each presenter focused on a specific aspect of Merton's life and contributions so...

Litigation against the largest subprime mortgage servicer in the US provides lessons about the appropriate regulation of mortgage servicing and adds to research about the causes of the financial crisis. Mortgage servicing is essential to the functioning of the financial system so servicers must...