Hitesh Doshi, Hyung Joo Kim, and Sang Byung Seo ♦ The identification of disaster risk has remained a significant challenge due to the rarity of macroeconomic disasters. We show that the interbank market can help characterize the time variation in…
Enrico Onali and Xiaoxia Ye ♦ We are the first to study the interplay between corporate diversification and debt maturity, both theoretically and empirically. Our models predict that diversification mitigates the debt-overhang problem, making long-term debt more attractive in the…
Emanuel Moench and Tobias Stein ♦ Equity returns follow a pronounced V-shape pattern around the onset of recessions. They sharply drop into negative territory just before business cycle peaks and then strongly recover as the recession unfolds. Recessions are typically…
Scott Guernsey, Matthew Serfling, and Cheng Yan ♦ After medical marijuana legalization (MML) by U.S. states, firms’ cost of equity (COE) decreases, especially for those with more growth opportunities, higher productivity, or a more skilled workforce. This policy change also…
C. S. Agnes Cheng, Iftekhar Hasan, Feng Teng, and Jing Xie ♦ This paper shows that when a compensation peer firm experiences a significant failure in its say on pay (SOP) voting, the focal firm’s stock price is adversely affected,…
Seth Armitage and Woon Sau Leung ♦ Exploiting changes in countries’ competition laws, we find that competition increases firms’ propensity to use zero leverage (ZL). We test the financial-flexibility, financial-constraint and quiet-life explanations for this result, concluding that desire for…
