Taking a slightly closer look at the EVA basics prompts that the metric by design is a synthetic mixture of returns from the operating and financing activities, and therefore, yields a biased assessment of both the operating and overall performance. Fundamentally, the scale of the measurement...

Alliances establish a private channel of communication between allied firms in which managers can obtain useful information about future investment opportunities. I examine whether this feature of alliances hinders the market's ability to correctly assess the investment opportunities of firms in...

Using novel data on detailed country-level sales exposures of U.S. multinational companies (MNCs) and unique identification strategies, we show that international cash flow diversification enhances firm debt capacity, but the magnitude of this effect varies with the innate country institutional...

Credit default swaps (CDSs) can create empty creditors who may push borrowers into inefficient bankruptcy but also reduce shareholders' incentives to default strategically. We show theoretically and empirically that the presence and the effects of empty creditors on firm outcomes depend on the...

This paper disproves all the Modigliani and Miller (1958) theorems. Debt or equity financing depends on the interest and discount rate difference. Investment yield does not necessarily increases with the debt/equity ratio. Finally, cost of capital actually rises with debt

We investigate the impact of family control on both the share price level and the decision to split the firm's stock. Low stock prices are associated with higher volatility and have been shown to attract more speculative trading, which may force managers to excessively focus on short-term...

We present a stochastic simulation forecasting model for stress testing aimed at assessing banks' capital adequacy, financial fragility and probability of default. The paper provides a theoretical presentation of the methodology and the essential features of the forecasting model on which it is...

Operational risk models, such as the loss distribution approach, frequently use past internal losses to forecast operational loss exposure. However, the ability of past losses to predict exposure, particularly tail exposure, has not been thoroughly examined in the literature. In this paper, we...

We document a capital supply channel in the connections between firms' and their peers' SEOs. Financially constrained firms are more likely to do an SEO (have higher SEO hazards) when more of their peers conducted an SEO within the prior six months. Positive exogenous shocks to indexer equity...

We study the impact of covenant violations on credit access for privately-held and publicly-traded firms, using a rich supervisory dataset of syndicated loans from 2006-2012. Leveraging the unique information on covenant compliance, collateral and default risk in the data, we show that banks are...