Hong Ru and Endong Yang ♦ Using transaction-level trade data from China Customs and loan data from the China Development Bank (CDB), we find that CDB credit to strategic industries at the top of supply chains leads to lower prices,…
Vicente J. Bermejo, Miguel A. Ferreira, Daniel Wolfenzon, and Rafael Zambrana ♦ We show cash windfalls affect the real economy by spurring entrepreneurship. We identify these effects using the Spanish Christmas Lottery, which provides a unique setting as prizes are…
François Degeorge and Giuseppe Pratobevera ♦ IPO underwriters have an incentive to underprice an IPO when they allocate shares to their affiliated funds. We label this conflict of interest “supernepotism” and we analyze its effect on IPO pricing. Using a…
Jens Hilscher, Robert A. Jarrow, and Donald R. van Deventer ♦ This paper proposes and estimates a tractable, arbitrage-free valuation model for corporate coupon bonds that includes a more realistic recovery rate process. Most existing studies use a recovery rate…
Le Ma, Anywhere Sikochi, and Yajun Xiao ♦ We examine how lenders design contracts to account for transitory and permanent cash flow shocks facing borrowers. We find that volatile transitory cash flow shocks are associated with fewer liquidity covenants, indicating…
Matthew Darst and Ehraz Refayet ♦ This paper studies how investor heterogeneity impacts equilibrium debt maturity. The optimal issuance strategy combines both long- and short-term debt. Long-term debt contains default risk, but hedges against intermediate downturns. Short-term debt provides repayment…
