How much does firm reputation matter in the public debt market? Using lawsuits that have an adverse effect on firm reputation, we find corporate bond prices react to lawsuit information. Litigated firms issue bonds with 4.9 percent higher yield spreads, 11-month shorter maturities, and $14.7...

We study the effects of bank transparency on both banks' asset and liquidity risks, and ultimately, on banking sector stability and welfare. We show how enhanced bank transparency increases banks' vulnerability to excessive deposit outflows, but this threat of a liquidity crisis incentivizes...

We augment the LLSV creditor rights index with a new “restructuring index” that measures the incentives provided to creditors to grant concessions outside formal bankruptcy. We study the joint impact of the two indexes on a firm's leverage policy. We show that the two indexes have at most a...

This paper investigates whether borrowers' supply chain relationships affect banks' lending decisions. These relationships benefit firms by reducing the information gap with banks, which increases the access to capital, while reducing the cost of the loan. However, banks demand increased...

Use of variability of profits and other accounting-based ratios in order to estimate a firm's risk of insolvency is a well-established concept in management and economics. This paper argues that these measures fail to approximate the true level of risk accurately because managers consider other...

We link genetic diversity in the country of origin of the firms' board members with corporate performance via board members' nationality. We hypothesize that our approach captures deep-rooted differences in cultural, institutional, social, psychological, physiological, and other traits that...

This paper investigates how lenders react to borrowers' rating changes under heterogeneous conditions and different regulatory regimes. Our findings suggest that corporate downgrades that increase capital requirements for lending banks under the Basel II framework are associated with increased...

Using recent cross-national data on more than 100 nations, this study investigates the financial effects of economy-wide institutional quality (corruption) on various bank activities: (i) the ratio of nonperforming loans to total loans; (ii) the capital-to-assets ratio; (iii) the...

Prior research underscores the critical role of prestigious underwriters in shaping the success of the initial public offering (IPO) process, particularly for young firms that do not have much of a track record. Recent scholarly work has shown that the likelihood of a start-up securing a lead...