Lisa K. Meulbroek

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Stocks can be overpriced when short sale constraints bind. We study the costs of short selling equities, 1926-1933, using the publicly observable market for borrowing stock. Some stocks are sometimes expensive to short, and it appears that stocks enter the borrowing market when shorting demand is high. We find that stocks that are expensive to short or(More)
In periods characterized by diminished public market financing, small biotechnology firms appear to be more likely to fund R&D through alliances with major corporations rather than with internal funds (raised through the capital markets). We consider 200 alliance agreements entered into by biotechnology firms between 1980 and 1995. Agreements signed during(More)
Firms with low ratios of fundamentals (such as earnings and book values) to market values are known to have systematically lower future stock returns. We document that short-sellers position themselves in the stock of such firms, and then cover their positions as the ratios mean-revert. We also show that short-sellers refine their trading strategies to(More)
We show empirically that firms behave consistently with how their CEOs behave personally in the context of leverage choices. Analyzing data on CEOs’ leverage in their most recent home purchases, we find a positive, economically significant, robust relation between personal and corporate leverage in both the cross-section and when examining CEO changes. The(More)
This paper presents the Capital Cash Flow method for valuing risky cash flows. I show that the Capital Cash Flow method is equivalent to discounting Free Cash Flows by the weighted average cost of capital. Because the interest tax shields are included in the cash flows, the Capital Cash Flow approach is easier to apply when the level of debt changes or when(More)
This paper examines how an option plan that rewards managers for firm performance relative to some market or industry benchmark should be structured, and gauges the deadweight costs of such a plan. Relative-performance-based compensation advocates contend that conventional stock options do not adequately discriminate between strong and weak managers,(More)
How do managers set financial policy? This paper uses a sample of unconstrained firms making major investments to examine intended financial policy decisions. The analysis reveals that the financial policies of the sample firms can reasonably be characterized as “pecking order” behavior as described by Donaldson (1961) and Myers (1984): (1) internal funds(More)
This paper analyzes the impact on stock price behavior of increased disclosure, stricter financial regulation and more efficient formal (legal) and informal (market-based) enforcement mechanisms. To address this issue, I study the stock price behavior of Mexican firms cross-listed on the NYSE through exchange-listed ADRs (US-listed firms), relative to(More)
This paper examines the prevalence of insider trading in the corporate debt market prior to takeover announcements, and the related conflicts of interest within financial intermediaries. We document significant pre-announcement trading activities and price movements in target bonds, in directions consistent with the nature of pending information. Unlike(More)