I study the impact of Lehman Brothers' bankruptcy and resultant inability to honor its obligations as a lender under committed credit lines. Firms that lost access to a credit line committed by Lehman Brothers experienced abnormal stock returns of -3%, on average, on the day of and day after...

We examine whether M&A transactions between firms sharing a common lender differ in important ways from those without common lenders. Consistent with the idea that banks serve a positive matchmaking role, we find higher abnormal announcement returns for deals in which the bidder and target share...

Do firms use credit line drawdowns to finance investment? Using a unique dataset of 467 COMPUSTAT firms with credit lines, we study the purpose of drawdowns during the 2007-2009 financial crisis. Our data show that credit line drawdowns had already increased in 2007, precisely when disruptions...

Using a unique dataset of credit line drawdowns and liquidity hedging, we study the relation between credit line usage and corporate investment. In line with theoretical predictions that credit lines aid firms to invest during times of limited credit availability, our findings reveal that the...

Related-party transactions, where one of the parties is owned or controlled by the other, are often regarded as a way to tunnel funds out of firms. This paper provides the first empirical evidence on a specific channel through which related-party lending may benefit borrowers, namely its ability...

We find credit line drawdowns are an important source of long-term finance for capital expenditures and acquisitions for all but the highest rated firms. Unrated and to a lesser extent intermediate-rated firms draw down credit lines most frequently when capital market conditions are unfavorable....

We provide new evidence on the role of bank lending in corporate innovation by exploiting the implementation of SFAS 166/167, which removed the off--balance sheet status of certain securitized assets of banks. The regulation affects bank lending and thus represents a credit supply shock to...

Debt ownership by equity-holding managers aligns their incentives more closely with those of creditors, thereby reducing agency costs of debt. We test this hypothesis by examining how terms of bank loans are related to executive pension and deferred compensation, i.e., inside debt held by...

The purpose of this study is to investigate how firms responded to the deterioration of bank health during the financially turbulent periods in the 2000s in making investment decisions and in meeting demand for liquidity. A rise in uncertainty regarding the ability to obtain external funds may...