This paper examines the effect of earnings management on financial leverage and how this relation is influenced by institutional environments by employing a large panel of 25,798 firms across 37 countries spanning the years 1989 to 2009. We find that firms with high earnings management...

This paper examines the effect of firm crash-risk exposure on the speed of leverage adjustment (SOA), and how this effect is influenced by information environments, by employing a large panel of 19,254 firms across 39 countries spanning the years 1989 to 2009. We find that firms exposed to a...

Private benefits of control distort the risk choices of owner-managers. In particular, when riskier projects entail a larger increase in cash flow than in private benefits (if successful), (more) equity financing renders the owner-manager (more) conservative, which lowers both expected payoff...

This paper examines the effect of organization capital on corporate debt structure. We find that firms with higher organization capital rely more on unsecured debt. Using state-level unemployment insurance benefits and industry median organization capital as instrumental variables, we identity...

Surprisingly little is known about the business cycle dynamics of leverage. The existing evidence documents that target leverage evolves pro-cyclically either for all firms or financially constrained ones. In contrast, we show that, on average, target leverage ratios evolve counter-cyclically...