Previous studies argue that takeover targets’ CEOs can use high leverage as a signal for commitment to undertaking value-enhancing projects, thus deterring the takeover attempts since the bankruptcy risk associated with high leverage can serve as an effective governance mechanism. This paper...

Asset-pricing facts on FOMC announcements have changed strikingly in the last decade. The pre-announcement drift has disappeared, and other known facts - the announcement premium and a stronger CAPM - now concentrate on a subset of announcements. We propose these distinct patterns correspond to...

Executory contracts raise difficult substantive and procedural questions under insolvency law. This essay tries to point out two prominent phenomena of substantive law concerning the treatment of executory contracts. Ipso facto clauses and licensing agreements will serve as examples in order to...

The financial industry is the 'heart and soul' of a healthy economy. As with the infamous 'Titanic,' it was generally regarded as 'too large to fail'. As was the case with the massive ship, which was preparing for an emergency, the financial industry lacked adequate resolution methods to deal...

This study investigates the influence of creditor control rights on the pricing of corporate loans. We construct a novel dataset that combines hand-collected covenant violations data with individual borrowers, creditors, and loan contract information. Our data allows us to distinguish between...

Bankruptcy and delisting due to other failures are two closely related yet sharplydifferent distress events. Using a state-of-the-art adaptive Lasso variable selectionmethod, we identify two different models for bankruptcy risk and other-failure risk.Both selected models gain better...

We study the link between illiquidity and co-movement in illiquidity and the way asset managers trade off illiquidity and co-illiquidity in their portfolio allocation decision. By exploring two experiments – the 2005 SHO Regulation and the 2008 short selling ban – we document that in the...