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The main aims of this paper are, first, to construct a consistent comparative set of data on the sources of finance for investment over the period 1970--89 for Germany, Japan, the United Kingdom and the United States and second, to challenge some conventional views of the international...
Persistent link: https://www.econbiz.de/10005656452
things, the theory predicts that the difference in leverage between a debt-friendly bankruptcy code (such as the UK’s) and a … (debt net of cash holdings) and controlling for other firm characteristics that affect leverage. … find the theory is strongly backed by the data. The results are robust to considerations such as employing net leverage …
Persistent link: https://www.econbiz.de/10005504655
This paper analyzes why corporate governance matters for stock returns if the stock market prices the underlying managerial agency problem correctly. Our theory assumes that strict corporate governance prevents managers from diverting cash flows, but reduces incentives for managerial effort. In...
Persistent link: https://www.econbiz.de/10011165663
equity to that based on debt-like hybrid claims such as preferred equity and subordinated debt. The erosion of common equity … represent a transfer from creditors (and potentially taxpayers) to equity holders in violation of the priority of debt over …
Persistent link: https://www.econbiz.de/10011083440
Are courts effective monitors of corporate decisions? In a controversial landmark case, the Delaware Supreme Court held directors personally liable for breaching their fiduciary duties, signaling a sharp increase in Delaware’s scrutiny over corporate decisions. In our event study, low-growth...
Persistent link: https://www.econbiz.de/10011084098
In spite of mounting losses banks continued to pay dividends during the crisis. We present a model that addresses this behavior. By paying out dividends, a bank transfers value to its shareholders away from creditors, among whom are other banks. This way, one bank's dividend payout policy...
Persistent link: https://www.econbiz.de/10011084101
privately-optimal level of bank leverage is neither too low nor too high: It efficiently balances the market discipline that … owners of risky debt impose on managerial shirking in monitoring loans against the asset substitution induced at high levels … of leverage. However, when correlated bank failures can impose significant social costs, regulators may bail out bank …
Persistent link: https://www.econbiz.de/10011084299
While losses were accumulating during the 2007-09 financial crisis, many banks continued to maintain a relatively smooth dividend policy. We present a model that explains this behavior in a setting where there are financial externalities across banks. In particular, by paying out dividends, a...
Persistent link: https://www.econbiz.de/10011084390
tax burden. We study this trade-off in a model with distortionary taxes and endogenous rationing of external finance. The …, especially in firms that depend more on external finance, and are negatively correlated with tax pressure. Second, transparency … is negatively correlated with tax pressure, particularly in sectors where firms are less dependent on external finance …
Persistent link: https://www.econbiz.de/10011084492
We present a model of labor market equilibrium in which managers are risk-averse, managerial talent (‘alpha’) is scarce, and firms seek alpha, that is, compete for this talent. When managers are not mobile across firms, firms provide efficient long-term compensation, which allows for...
Persistent link: https://www.econbiz.de/10011084515