ABSTRACT This paper analyzes whether the political connections of listed firms in United States affect cost and terms loan contracts. Using a hand‐collected data set S&P 500 companies over 2003–2008 time period, we find that bank loans is significantly lower for have board members with ties. We consider two possible explanations these findings: Borrower Channel which lenders charge rates because they recognize enhance borrower's credit worthiness Bank banks assign greater value to...

ABSTRACT We study the implications of hedging for corporate financing and investment. do so using an extensive, hand‐collected data set on activities. Hedging can lower odds negative realizations, thereby reducing expected costs financial distress. In theory, this should ease a firm's access to credit. Using tax‐based instrumental variable approach, we show that hedgers pay interest spreads are less likely have capital expenditure restrictions in their loan agreements. These favorable terms,...

ABSTRACT We study whether cross‐country differences in regulations have affected international bank flows. find strong evidence that banks transferred funds to markets with fewer regulations. This form of regulatory arbitrage suggests there may be a destructive “race the bottom” global regulations, which restricts domestic regulators’ ability limit risk‐taking. However, we also links between regulation and flows are significantly stronger if recipient country is developed property rights...

Abstract The recent split share structure reform in China involves the nontradable shareholders proposing a compensation package to tradable exchange for listing rights of their shares. We find that state ownership (the major owners shares) has positive effect on final ratio. In contrast, mutual fund institutional owner negative ratio and especially state-owned firms. evidence is consistent with our predictions have incentives complete quickly exert political pressure funds accept terms...

Are firms more resilient to systemic banking crises in economies with higher levels of social trust? Using firm-level data 34 countries from 1990 through 2011, we find that liquidity-dependent high-trust obtain trade credit and suffer smaller drops profits employment during than similar low-trust economies. The results are consistent the view when block normal bank-lending channel, greater trust facilitates access informal finance, cushioning effects these on corporate employment.

We investigate whether and to what extent shareholder litigation shapes corporate innovation by examining the staggered adoption of universal demand laws in 23 states from 1989 2005. These impose obstacles against shareholders filing derivative lawsuits, thereby significantly reducing managers’ risk. Using a difference-in-differences design matched sample, we find that, following passage laws, firms invested more research development, produced patents new technological classes based on...

Did regulatory reforms that lowered barriers to competition increase or decrease the quality of information banks disclose public? By integrating gravity model investment with state-specific process bank deregulation occurred in United States from 1980s through 1990s, we develop a bank-specific, time-varying measure deregulation-induced competition. We find an intensification reduced abnormal accruals loan loss provisions and frequency which restate financial statements. The results suggest...

ABSTRACT This paper documents that changes in litigation risk affect corporate voluntary disclosure practices. We make causal inferences by exploiting three legal events generate exogenous variations firms' risk. Using a matching-based fixed-effect difference-in-differences design, we find the treated firms tend to fewer (more) management earnings forecasts relative control when they expect be lower (higher) following event. The results are concentrated on conveying negative news and robust...

This study identifies information accessibility as a determinant of corporate innovation. Using the sudden termination Google’s search services in China, we find persistently large negative effect on intensity and quality innovation among firms relying foreign knowledge. The results are stronger for industries dominated by technology, regions with local web filters, fewer alternative sources information. We also that affected cite patents their efficiency declines after exit. Overall,...

ABSTRACT This paper investigates whether the business relations between mutual funds and brokerage firms influence sell‐side analyst recommendations. Using a unique data set that discloses firms’ commission income derived from each fund client as well share holdings of these funds, we find an analyst's recommendation on stock relative to consensus is significantly higher if held by clients firm. The optimism in recommendations increases with weight client's portfolio revenue generated...