We show that public charities with corporate directors on their boards spend more on lobbying for connected firms' industry interests. The effects of board connections are stronger when firms have greater lobbying expenditures themselves or when charities are constrained on funding. We rule out...

I present a theory of how capital structure and control structure co-vary in business groups. A controlling party of a business group adopts the pyramidal structure with excess internal capital to overcome restrictions on external financing imposed by control benefits. External financing...

This paper examines sovereign ceiling violations (SCVs) in credit default swap (CDS) markets, whereby private sector firms have lower CDS spreads relative to their sovereign counterparts with equal contractual terms. Using 5-year CDS spreads on 2,364 companies in 54 countries during 2004-2011,...

For 2,695 US corporations from 1996 to 2009, we find that alignment in political orientation between the chief executive officer (CEO) and independent directors is associated with lower firm valuations, lower operating profitability, and increased internal agency conflicts such as a reduced...

Former employee directors bring unique aspects to firm governance. While they have valuable firm-specific knowledge, their connections to current management often compromise their ability to serve as effective monitors. Consistent with this viewpoint, we find that the presence of former employee...

We document that stock return momentum strategies earn 20% more per year among firms with strong alignment in their past equity and credit returns than firms with diverging returns across these two markets. Using structural Q-theory, we show information in both equity and credit from the full...

This paper highlights the adverse consequences of sluggish credit rating updates in creating information efficiency distortions and investment anomalies. We first document significant credit default swap (CDS) return momentum yielding 7.1% per year. We further show that cross-market momentum...

We document that stock return momentum strategies earn 20% more per year among firms with strong alignment in their past equity and credit returns than firms with diverging returns across these two markets. Using structural Q-theory, we show information in both equity and credit from the full...

Using novel inter-firm patent litigation data, we show that defendant firms become financially constrained, reduce innovation activity, and shift toward exploitative innovation leveraging past experience and expertise. The exploitative innovation strategy reflects the patent race motives and...