We show that political polarization between directors and a CEO negatively impacts the effectiveness of corporate boards. At the director level, polarization increases directors’ incentive to monitor the CEO but creates a hostile board environment and discourages moderate directors’ board...

We exploit exogenous variation in the timing of gubernatorial elections to study the timing of bank failure in the US. Using hazard analysis, we show that bank failure is about 45% less likely in the year leading up to an election. Political control (i.e. lack of competition) can explain all of...

We examine the nature of state blockholding across publicly listed firms in East Asia by assembling a unique dataset spanning 16 years and 9 economies. Our newly compiled data identifies ultimate owners for each firm annually between 1997 and 2012, totaling 2,984 firm-year observations. Three...

We use the SEC Tick Size Pilot Program to show that stock liquidity reduces the cost of bank loans. Treated firms experience a 52 basis point increase in the cost of borrowing during the Tick Size Pilot Program; an effect that reverses when the program ends. We find similar results in a broad...

Firms contract capital expenditure and reduce new debt issuance following the bankruptcy of an industry-peer. The spillover effect is transitory and declines with industrial distance. Industries that are financially constrained, geographically concentrated or competitive are more vulnerable to...

We provide evidence that managerial incentives to manipulate real activities can influence the effectiveness of fiscal policy. Increases in federal spending lead government-dependent firms to expand R&D investment whereas industry-peer firms contract. The net result is a reduction in...

National Basketball Association (NBA) contracting rules provide plausibly exogenous variation in career concerns near contract end. We use this setting to study how individual career concerns affect risk-taking behavior and can sabotage team performance. Using the frequency and duration of...

We show that global political uncertainty, measured by the U.S. election cycle, on average, leads to a fall in equity returns in fifty non-U.S. countries. At the same time, market volatilities rise, local currencies depreciate, and sovereign bond returns increase. The effect of global political...

I model the capital-risk-profit relation in a simultaneous three-equation model. The results show no systematic relation between risk and profit which is consistent with the view that risk is chosen optimally. Taking this as given, the equilibrium relation between capital and profit depends on...