We document a positive association between political uncertainty and accounting conservatism. In the year prior to a U.S. presidential election, on average, accounting conservatism increases by nearly 20 percent. This election year effect is stronger when the election is closer, when the...

We document a positive association between political uncertainty and accounting conservatism. In the year prior to a U.S. presidential election, on average, accounting conservatism increases by nearly 20 percent. This election year effect is stronger when the election is closer, when the...

Election periods are associated with uncertainty about future governmental structure and public policy, i.e., political uncertainty, leading to an increase in agency costs. As a response to rising agency costs, we find that in the year prior to a U.S. presidential election, accounting...

This article models the decisions of a regulated utility that has the option of meeting excess demand by buying power on the spot markets. The risk associated with the cost of meeting excess consumer demand can be hedged by trading in a financial derivatives market. We show that the optimal...

In this paper, we develop a dynamic model of institutional share dumping surrounding control events. Institutional investors sometimes dump shares, despite trading losses, in order to manipulate share prices and trigger activism by “relationship” investors. These institutional investors are...

This paper develops a new theory of the capital structure of parent subsidiary organizations based on legal-system arbitrage: The capital structure of parent subsidiary organizations is chosen to minimize the agency costs generated by selective renegotiation of claims written on the component...