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…
Angel Tengulov, Josef Zechner, and Jeffrey Zwiebel ♦ Long-term growth expectations are central to investment analysis and corporate valuation. Despite a dominant effect on firm value, the academic literature and practitioner conventions provide little guidance on how this long-term growth…
Tao Chen, Xi Xiong, and Kunru Zou ♦ Exploring the minimum wage policy discontinuities at county borders, we find that minimum wage hikes induce industrial firms to pollute more and reduce their abatement efforts. State ownership mitigates these negative effects,…
Sumit Agarwal, Gene Amromin, Itzhak Ben-David, and Douglas D. Evanoff ♦ We study a specific practice of predatory lending: borrowers being rejected and approved in rapid succession by the same lender. We show that in such cases borrower and contract…
Massimo Massa, David Schumacher, and Yan Wang ♦ We highlight an important but overlooked characteristic of financial fragility: “fragile” stocks command higher liquidity. This reduces their sensitivity to corporate actions with price impact and affects the firms’ incentives to engage…
