Our study investigates the Morellec and Zhdanov (2008) prediction that firms strategically underleverage to win future takeover contests. Since firms undergo arduous and long planning processes well in advance of publicly announcing an acquisition bid, they also pre-plan their financial structure. Recent survey evidence by Aktas et al. (2021) suggests that almost half of all… Read More »
The result of corporate debt renegotiations between debtors and creditors is of great importance for aggregate productivity and employment, as it defines the distressed companies that can survive. From a policy perspective, it is desirable to have in place a bankruptcy system that facilitates renegotiations and allows companies—which create value for workers, costumers, and creditors—to… Read More »
Despite likely being the most successful investment product since the 2008 global financial crisis, exchange traded funds (ETFs) have a serious comparability problem. The problem is particularly acute in environmental, social, and governance (ESG) themed funds, which have benefited from a recent surge in investor interest. A post-crisis explosion in ETF product offerings, combined with extensive issuer discretion in the composition, replication and tracking… Read More »
Attention to and interest in environmental and social (ES) issues increased exponentially in the past decade by concerned citizens worldwide, governments, regulators, individual investors, and intermediaries such as mutual funds. The number of ES funds more than doubled over the past few years, and the amount invested through them grew even more. These ES funds typically favor investments… Read More »
The vast majority of mergers and acquisitions (M&As) in recent years employ fairness opinions (FOs). FOs are provided by an outside advisor (typically an investment bank) and reflect the advisor’s opinion that the terms of the transaction are “fair” to the shareholders from a financial perspective. To justify their opinion, the advisor performs valuation analyses… Read More »
On August 2, the Board of Governors of the IMF approved the creation of approximately $650 billion of Special Drawing Rights (SDRs)—the IMF-created reserve currency—to boost global liquidity and support the ongoing pandemic response in emerging markets. This was the largest increase the U.S. treasury secretary could approve without the issuance being subject to an approving vote in the U.S.… Read More »
Almost all countries around the world have historically allowed businesses to write off interest expenses against taxable income. Critics argue that the tax-favored status of debt has created a corporate debt pileup, thereby exacerbating economic downturns. This argument, which gained more attention after the 2008 global financial crisis, implicitly assumes that the tax incentives have… Read More »
By the end of 2020, more than 240 special-purpose acquisition companies (SPACs) listed in the U.S. (on NASDAQ or the NYSE), raising a record $83 billion, according to SPAC Research. SPACs have already surged past last year’s record in the first quarter of 2021, raising $98.1 billion. These numbers are eye-catching. In 2007, the average… Read More »
Recognizing that “investor demand for, and company disclosure of information about, climate change risks, impacts, and opportunities has grown dramatically,” former Securities and Exchange Commission (SEC or Commission) Acting Chair Allison Herren Lee released 15 questions for consideration on March 15, 2021 “with an eye toward facilitating the disclosure of consistent, comparable, and reliable information… Read More »
Introduction Special-Purpose Acquisition Companies (SPACs) have been widely discussed over the past year. According to the U.S. Securities and Exchange Commission (SEC), a SPAC is created specifically to pool funds in order to finance a merger or acquisition opportunity within a set time frame. A SPAC has 24 months after the initial public offering (IPO)… Read More »
