Liens provide secured debt holders with the right to foreclose on collateral under specific circumstances and priority rights to collection during a debtor's bankruptcy proceedings. This paper investigates the economic value of such liens in secured corporate debt contracts. The economic value...

This article explores price impact in the context of securities fraud litigation, focusing on the probability of observing directionally-consistent abnormal returns (those that go in the direction of a plaintiff's theory of liability) under the hypothesis of price impact versus no price impact....

Although the fraud-on-the-market presumption has been a legal cornerstone for nearly four decades, the mechanics underpinning this presumption have received limited analysis in the law and economics literature. This paper introduces a formal model that elucidates the mechanisms behind the...

Prior evidence suggests a puzzling absence of compensating returns to the common stocks of highly-distressed companies. I examine three sets of highly-distressed common stocks - one set from the crash of the internet bubble (1999 to 2002), one from the financial crisis (2007 through 2008), and...

Prior work demonstrates that neither Altman Z-score nor Merton distance-to-default predict bankruptcy in unbalanced datasets. I show that one-year stock returns are a powerful bankruptcy predictor. In U.S. public firms from December 31, 1995 through December 31, 2021 that are members of the...

The dividend (Gordon) growth model (DGM) is a simple stock valuation equation in four variables: (1) price; (2) next-period cash flow; (3) a perpetual and constant rate of growth in the periodic cash flow; and (4) a perpetually-constant discount rate. The DGM can be expressed to equate the...

The discounted cash flow (DCF) valuation methodology is ubiquitous in finance, but as a single equation in a potentially-infinite set of unobservable unknowns, it is unfalsifiable and therefore untestable. While bonds can be viewed as examples of DCF pricing, this depends on their prices often...

Disinformation may be an insoluble problem in many cases because belief in disinformation rests mostly on high trust in the information source and not on the plausibility of the information itself. I use a Bayesian framework to illustrate this problem and develop a simple notion of Bayesian...

I show that a single ratio requiring only a public company's face value of debt and stock market capitalization is a robust bankruptcy predictor. I develop this ratio from a simple theory of the bankruptcy decision and denote it Ps, since it is the minimum price at which a firm's debt must trade...

Market capitalization does not equal market value. Demand curves for fungible assets like common stock or cryptocurrency are downward sloping at any given point in time, implying that even a small additional sale, all else equal, may have required a lower price to induce even a slightly larger...