This paper provides evidence that firm value declines when credit default swaps (CDS) are initiated, and that the effect is greater when CDS trading activity is higher. This decline, which arises from an increase in the cost of capital as opposed to a decrease in free cash flows, traces to a...

This paper proposes a new discounted cash flows' valuation setup, and derives a general expression for the tax shields' discount rate. This setup applies to any debt policy and any cash flow pattern. It only requires the equality at any time between the assets side and the liabilities side of...

We investigate how sell-side analysts adjust their earnings forecasts following ESG incidents. We find that following negative ESG news, analysts significantly downgrade their earnings forecasts at all horizons, including long-term. Forecast revisions account for all the negative impact of ESG...

In this paper, we revisit a frequently employed simplification within the WACC approach that company cost of capital kV is supposed to be invariant to the debt ratio and therefore equal to the unlevered cost kU . Even though we know from Miles and Ezzell (1980) that kV formally differs from kU ,...

Our study is the first to provide systematic evidence of a hump-shaped CEO tenure-firm value relation. This pattern is supported by announcement returns to sudden CEO deaths, which mitigate endogeneity concerns. Cross-sectionally, firm value starts to decline after fewer years of CEO tenure in...

We study the effect of antitakeover provisions (ATPs) on innovation. To establish causality, we use a regression discontinuity approach that relies on locally exogenous variation generated by shareholder proposal votes. We find a positive, causal effect of ATPs on innovation. This positive...

The aim of this paper is to study the influence of the Merger and Acquisition (M&A) payment method decision on the acquiring shareholders' M&A valuation, considering the relevance of the acquiring ownership structure and the legal and institutional environment, and the possibility that the...

In late 2017, DuraTable received a number of unsolicited inquiries regarding its interest in selling out in a going private transaction, mostly from private equity firms. Since the chairman of the board and founder, Gary Reynolds, was approaching retirement age and the largest single shareholder...

The paper studies how stock price misvaluation and financial frictions affect whether an acquisition occurs between or within industries and whether the acquirer pays in cash or stocks. I set up a model where stock market misvaluation correlates within industries and across industries and assume...

I examine acquisitions of private firms by public acquirers to better understand the effects of financial constraints on the division of economic gains in takeovers. Empirical tests exploit interstate bank branching deregulation, which relaxes financial constraints on private firms and can...