In addition to its well-documented alignment effect, managerial ownership may also value-destroying effects by shifting risk to managers and encouraging risk-substitution; that is, managers with relatively undiversified personal portfolios tend to pass up profitable projects with high...

This study constructs a novel dataset of bankruptcy filings for a large sample of non-US firms in 14 developed markets and sheds new light on the cross-sectional relation between default risk and stock returns. Using the reduced-form approach of Campbell et al. (2008) to estimate default...