Using a new measure of shareholder inattention based on exogenous industry shocks to institutional investor portfolios, we document a positive and significant relation between firms with distracted institutional shareholders and the cost of debt financing. This effect is stronger for firms with...

We examine the effect of liability protection on the compensation of directors and on takeover outcomes. Consistent with the hypothesis that directors require additional compensation if they bear liability, we find that director compensation is higher for firms that provide less liability...