We provide evidence that credit investors do not fully impound the implications of firms' cost structure when pricing credit default swaps. Information about firms' cost structure is not disclosed and needs to be estimated. Furthermore, the performance implications of firms' cost structure...

We examine whether cost stickiness is associated with value creation in mergers and acquisitions (M&A). We find that the acquirer's cost stickiness is negatively associated with the abnormal returns around the acquisition announcement, and deal synergies, and positively associated with...

We examine how income taxes—both managerial and corporate—influence the design of firms’ debt contracts and their use of financial covenants in particular. Both levels of taxation have the potential to exacerbate conflicts of interest among creditors, shareholders, and managers and,...

We examine whether operating inflexibility posed by labor unions affects goodwill impairment. We predict such inflexibility hinders resource reallocation after acquisition, thereby preventing the acquiring firm from realizing synergies included in goodwill. Consistent with this prediction, we...

We examine the relation between a firm’s reliance on high-skill workers and its accounting conservatism. We find that reliance on high-skill workers is negatively related to accounting conservatism, presumably because firms with higher labor adjustment costs are more concerned about the cost...

We examine the voluntary disclosure theory’s prediction of heterogeneous stock market reaction to M&A conference calls attributable to the uncertainty of investors’ response. Using a series of quantile regressions, we find that the incidence of conference calls is associated with both...