The growth of the private equity industry has spurred concerns about its impact on the economy. This analysis looks across nations and industries to assess the impact of private equity on industry performance. We find that industries where private equity funds invest grow more quickly in terms of total production and employment, and appear less exposed to aggregate shocks. We perform a number o...

Trading frictions in financial markets affect more long-term than short-term bonds, generating an upward-sloping yield curve. Long-term financing is expensive economies with higher trading so firms choose to borrow and invest shorter horizons lower productivity projects. The theory guides a new identification of the slope liquidity spread data. We measure calibrate model for United States, coun...

We study how to design an optimal government loan program for risky R&D projects with positive externalities. With adverse selection, the contract involves a high interest rate but nearly zero cofinancing by entrepreneur. This contrasts sharply observed schemes. selection and moral hazard, allowing two levels of effort entrepreneur, policy consists menu at most contracts, one self-financing...

ABSTRACT We study the optimal information system in a debt contracting setting which managers can engage value destroying risk-shifting behavior. The issues early-warning signals that allow lenders to take corrective actions such as liquidating unprofitable projects. When are empire builders, exhibits conservative bias leads excessive and project liquidations relative first best. In contrast, w...

Prior research shows that corporate innovation enhances firm value. Using a novel text-based measure of innovation, we explore how the effects on performance change in presence economic policy uncertainty. We use large sample US firms over period 1996 to 2010 test relationship by executing firm-fixed effect regressions. Our results show significantly positively affects performance. However, our...

We implement a lab-in-the-field experiment with 334 Turkish loan officers to document gender discrimination in small business lending and unpack mechanisms. Officers review multiple real-life applications which we randomize applicant gender. While unconditional approval rates are the same, 26 percent more likely require guarantor when present same application as coming from female instead of ma...

Using arguments from the behavioral theory of firm, agency theory, and literature on internal capital markets, this article investigates relationship between financial slack firms’ profitability in standalone versus business group–affiliated firms. a large sample French privately held firms, we show that there is quadratic, inverse U-shape for We observe relation steeper group affiliated firms ...

SYNOPSIS In this study, we propose a reciprocal rent-seeking game between politicians and individual auditors with political connections examine how these auditors' influence their audit quality. Using hand-collected data from China 2008 2013, find that politically connected have significantly lower tendency to issue modified opinions (MAOs). We also politicians' career prospects are adversely ...