This paper examines whether firms are able to use acquisitions ease their financial constraints. The results show that do financing constraints for constrained acquirers. Relative unconstrained acquirers, financially more likely undervalued equity fund and target liquid firms. Using a propensity score matched sample in difference-in-difference framework, the acquirers become less post-acquisiti...

We investigate determinants of bankers’ presence on boards of non-financial corporations, factors contributing to their appointments, and bankers’ effect on leverage, investment, and Tobin’s Q following board-appointments. We use a unique data set comprising financially-distressed, undistressed, constrained and unconstrained firms of all asset-sizes. We find banker-board-appointments are positi...

An influential thesis, dubbed “Doing Well by Doing Good”, argues that corporate social responsibility is profitable. We establish that, if anything, the reverse is true: firms do good only when they do well in the sense of having financial slack. We model a firm’s optimal choices of capital and goodness subject to financial constraints. Lessconstrained firms spend more on goodness. We verify th...

We develop a model of bidding markets with financial constraints a la Che and Gale (1998b) in which two firms optimally choose their budgets. First, we provide an alternative explanation for the dispersion of markups and “money left on the table” across procurement auctions. Interestingly, this explanation does not hinge on significant private information but on differences, both endogenous and...

In this paper we present a model of oligopoly and financial constraints. We study allocations which are bankruptcy-free (BF) in the sense that no firm can drive another firm to bankruptcy without becoming bankrupt. We show how such allocations can be sustained as an equilibrium of a dynamic game. When there are two firms, all equilibria yield BF allocations. When there are more than two firms, ...

The short run effects of financial constraints (FCs) on the expected growth rate of firms and their long-term implications on the evolution of the firm size distribution have been recently investigated by several scholars. In this paper we extend the analysis to a wider and largely unexplored range of possible FCs effects, including the autoregressive and heteroskedastic structure of the firm g...

We examine micro-level channels of how financial development can affect macroeconomic outcomes like the level of income and export intensity. We investigate theoretically and empirically how financial constraints affect a firm’s innovation and export activities, using unique firm survey data which provides direct measures for innovations and firm-specific financial constraints. We find that fin...