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...

We study the effect of systematic uncertainty on firms' precautionary saving motives. As systematic uncertainty changes firms' operational and investment policies, its implications on firm cash holdings remain unclear. Using a GARCH-model based methodology, we construct novel, forward-looking...

We explain the coexistence of different financiers like Venture Capital (VC) and Angel investors and study the role of policymakers in promoting innovation. VC investors are better informed. However, Angel investors offer entrepreneurs a better avenue to capture entrepreneurs' motivational...

Relative performance evaluation (RPE) in CEO compensation can be used as a commitment device to pay CEOs for their revealed relative talent. We find evidence consistent with the talent-retention hypothesis, using two different approaches. First, we examine the RPE terms in compensation contracts...

Do strong incentives to cut costs lead firms to neglect negative externalities? We find that cost-cutting incentives can be environmentally friendly. To arrive at this conclusion, we examine uniquely detailed plant-level data of private and public firms in the most polluting industry in the US -...