We show theoretically that while cash allows financially constrained firms to hedge future
investment against income shortfalls, reducing current debt is a more effective way to boost …

This article examines managers' incentive to play it safe. We find that, after managers are
insulated by the adoption of an antitakeover law, they take value-destroying actions that …

We calculate the present value of state employee pension liabilities using discount rates that
reflect the risk of the payments from a taxpayer perspective. If benefits have the same default …

We study a model in which future financing constraints lead firms to have a preference for
investments with shorter payback periods, investments with less risk, and investments that …

Monetary policy affects the real economy in part through its effects on financial institutions.
High frequency event studies show the introduction of unconventional monetary policy in the …

Both financing and risk management involve promises to pay that need to be collateralized,
resulting in a financing versus risk management trade-off. We study this trade-off in a …

The unique regulation of US public pension funds links their liability discount rate to the
expected return on assets, which gives them incentives to invest more in risky assets in …

The authors examine how a firm's financial leverage affects marketing outcomes and
consequent firm value. They find that leverage has a dual effect: it reduces customer …

We use an important legal event to examine the effect of managerial fiduciary duties on
equity-debt conflicts. A 1991 legal ruling changed corporate directors' fiduciary duties in …

I empirically test whether firms engage in risk-shifting. Contrary to what risk-shifting theory
predicts, I find that firms reduce investment risk when they approach financial distress. To …