We estimate real losses arising from the cross-sectional misallocation of financial liabilities. Extending the framework of Hsieh and Klenow (2009) to the liabilities side of the balance sheet, and using manufacturing firm data from the United States and China, we find significant misallocation...

We re-examine the relation between taxes and corporate leverage, using variation in state corporate income tax rates. In contrast with prior research, we document that corporate leverage increases following tax cuts for both privately held and publicly listed firms. We use an estimated dynamic...

This chapter discusses how applied researchers in corporate finance can address endogeneity concerns. We begin by reviewing the sources of endogeneity - omitted variables, simultaneity, and measurement error - and their implications for inference. We then discuss in detail a number of...