Public firms are becoming increasingly interconnected through institutional investors' stock ownership, specifically through cross-ownership, in which an institutional investor has a significant stake in multiple firms in the same industry. When a firm seeks external financing for its investment...

To study the impact of stochastic interest rates and capital illiquidity on investment and firm value, we incorporate a widely-used arbitrage-free term structure model of interest rates into a standard q-theoretic framework. Our generalized q model informs us to use corporate credit-risk...

We study the impact of stochastic interest rates and capital illiquidity on investment and firm value by incorporating a widely used arbitrage-free term structure model of interest rates into a standard q theoretic framework. Our generalized q model informs us to use corporate credit-risk...

Rating agencies are expected to be concerned about their long-term reputation because if they lose the trust of investors their ratings would lose credibility and value. We expect that there is less effective monitoring and hence more opportunities for ratings shopping within speculative grades...

The interest rate is a key determinant of firm investment. We integrate a widely used term structure model of interest rates, CIR (Cox, Ingersoll, and Ross (1985)), with the q theory of investment (Hayashi (1982) and Abel and Eberly (1994)). We show that stochastic interest rates have...