... of future credit-rating downgrades. In this period, I find that firms initially used the refunds to increase cash holdings before paying down debt in the following year. These results highlight the importance of considering macroeconomic conditions when studying firm uses of tax-related cash flow...

...Anne Beyer; Ronald A. Dye ABSTRACT This paper studies equilibrium voluntary disclosures for a company financed with both debt and equity, where the firm's manager is compensated based on a linear combination of the market prices of the firm's equity and enterprise values (i.e., the sum of its...

...Moshe Cohen; Sharon P. Katz; Sunay Mutlu; Gil Sadka ABSTRACT Prior evidence shows a reduction in leverage after covenant violations, but we do not know whether covenants affect leverage before they are violated. In this study, we use an exogenous accounting-based shock to debt...

...Dan Amiram; Alon Kalay; Gil Sadka ABSTRACT Despite theoretical and anecdotal evidence highlighting the importance of industry-level analyses to lenders, the empirical literature on debt pricing has focused almost exclusively on firm-level forces that affect expected loss. This paper provides...

...Judson Caskey; John S. Hughes ABSTRACT We examine how alternative accounting measures of fair value impact the ability of debt covenants to mitigate inefficient investment decisions. In our setting, shareholders make a non-contractible project choice after signing a debt contract. At a later date...