Asset prices remain depressed for several years following mutual fund fire sales. We show that price pressure from fire sales is partly due to asymmetric information which leads to an adverse selection problem for arbitrageurs. After a flow shock, fund managers do not scale down their portfolio,...

Political influence on bank credit allocation is often viewed as being necessary to address social problems like income inequality. We hypothesize that such influence elicits bank capital responses. Our hypothesis yields three testable predictions for which we find supporting evidence. First,...

Capital expenditures of U.S. public firms, relative to total assets, decrease by more than a half from 1980 to 2012. The decline is pervasive across industries and firms of different characteristics. The decline is not explained by time variation in industry composition in the economy, firms'...

This paper develops and tests a new theoretical explanation for why a firm conducts open-market and privately-negotiated stock repurchases. Investors may disagree with the manager about the firm's investment projects. A repurchase causes a change in the investor base as investors who are more...

This paper investigates how managerial expertise — specifically, industry expertise — affects firm value through divestiture. Using CEOs' managerial experiences in industries throughout their careers as a measure of their industry expertise, I find that CEOs in diversified conglomerates are...

We examine the valuation impact of bank-financed M&As and the loan contracts used to finance M&A transactions, focusing on the difference between bank-dependent acquirers and other acquirers. We find that bank-financed deals have higher acquirer's CARs relative to other cash M&A deals, but this...

We propose and test a new explanation for forced CEO turnover, and examine its implications for the impact of firm performance on CEO turnover. Investors may disagree with management on optimal decisions due to heterogeneous prior beliefs. Theory suggests that such disagreement may be persistent...

Executives trade more profitably and opportunistically over the course of the tenure of independent directors (IDs). IDs' increased connections with and hence allegiance to executives are likely the channel through which ID tenure can affect executive trading. Executive opportunism is mitigated...

Political influence on bank credit allocation is often viewed as being necessary to address social problems like income inequality. We hypothesize that such influence affects bank governance and elicits bank capital responses. Our hypothesis yields three testable predictions, for which we find...