Amiyatosh Purnanandam

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This paper develops a theory of corporate risk-management in the presence of deadweight losses caused by financial distress and tests its implications using a comprehensive dataset of over 3000 non-financial firms. Unlike extant theories that explain only the ex-ante riskmanagement behavior of a firm, I show that the shareholders optimally engage in ex-post(More)
We examine the risk-taking behavior of money market funds during the financial crisis of 2007–2010. We find that (1) money market funds experienced an unprecedented expansion in their risk-taking opportunities; (2) funds had strong incentives to take on risk because fund inflows were highly responsive to fund yields; (3) funds sponsored by financial(More)
This paper shows the relation between CEO ownership and firm valuation hinges critically on the strength of external governance (EG). The relation is hump shaped when EG is weak, but is insignificant when EG is strong. The results imply that CEO ownership and EG are substitutes in mitigating agency problems when ownership is low. However, very high levels(More)
This paper studies the valuation of initial public offerings (IPO) using comparable firm multiples. In a sample of more than 2000 IPOs from 1980 to 1997, we find that the median IPO is overvalued at the offer by about 50% relative to its industry peers. This overvaluation is robust over time, across technology and non-technology IPOs, to different price(More)
Dislocations occur when financial markets, operating under stressful conditions, experience large, widespread asset mispricings. This study documents systematic dislocations in world capital markets and the importance of their fluctuations for expected asset returns. Our novel, model-free measure of these dislocations is a monthly average of six hundred(More)
We provide a new explanation for the extremely high level of initial public offering (IPO) underpricing during the Internet bubble years of the late 1990s based on the allocation practices of underwriters. By requiring their customers to buy the stock in the aftermarket in return for IPO allocations (a tie-in agreement), the underwriters created artificial(More)
Following a severe currency crisis in 1998, the Brazilian economy switched from a fixed to a floating exchange rate regime in 1999. Brazilian firms that had accumulated foreign currency liabilities in the fixed exchange rate regime suddenly found themselves exposed to significant currency risk. The temporary disequilibrium created by this shock allows us to(More)