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Previous studies have found that the proportion of equity in total new debt and equity issues is negatively correlated with future equity market returns. Researchers have interpreted this finding as evidence that corporate managers are able to predict the systematic component of their stock returns and to issue equity when the market is overvalued. In this(More)
Informational scope economies provide a cost advantage to universal banks offering " one-stop shopping " for lending and underwriting that enables them to " lock in " their clients' subsequent business. This market power reduces universal banks' incentive, relative to that of specialized investment banks, to apply costly underwriting efforts; consequently,(More)
We provide empirical evidence that a firm's overall visibility with investors, as measured by its product market advertising, has important consequences for the stock market. Specifically we show that firms with greater advertising expenditures, ceteris paribus, have a larger number of both individual and institutional investors, and better liquidity of(More)
Tech for useful comments and suggestions. We also thank Yaniv Grinstein for providing us the option backdating data. Abstract We provide evidence that religiosity deters undesirable corporate behavior. Firms headquartered in more religious counties are less likely to backdate options, practice aggressive earnings management, and be the target of class(More)
We analyze firms' choice between exchanges to list equity (including multiple listings), and exchanges choice of listing standards for firms which apply for listing. We model an equity market characterized by asymmetric information, where outsiders can reduce their informational disadvantage relative to insiders by producing (noisy) information about firms(More)
a r t i c l e i n f o a b s t r a c t We examine implications of a society's cultural emphasis on moral sentiments. Entrepreneurs and investors interact in a game that entails both adverse selection and moral hazard; entrepreneurs may attempt to breach their contracts and expropriate investors. An agent is born into a particular culture but chooses whether(More)
The analysis examines the role of factor endowments ― human and natural ― in determining the allocation of talent between production and appropriation and the quality of property rights institutions. It is shown that a larger stock of human capital and a smaller amount of natural resources cause a shift of talent away from appropriation. As human capital(More)