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…
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,…
