Contracting costs and the window of opportunity for straight debt issues

We analyze whether fluctuation in economy-wide factors cause time-series variation in the contracting costs of moral hazard, adverse selection, and financial distress for a sample of straight debt issues. We find that the announcement period abnormal returns to debt issues are more negative in periods of higher interest rates and in industry downturns. When we partition the impact of each issue- and firm-specific measure of contracting costs across high and low levels of each economy-wide variable, we find that only the measures of agency cost are significant in general, and measures of financial distress become relevant for those debt issues that constitute a leverage increase for the firms.     

Discussion of “Information Asymmetries about Measurement Quality”

This article discusses Glover and Levine (2019). It summarizes Glover and Levine's model, its contributions, and practical implications. It also suggests empirical extensions based on the predictions of the model.     

Managerial Ability and Credit Ratings

We test whether credit rating analysts consider managerial ability as a credit risk factor and find that higher‐ability managers obtain more favorable credit ratings. Controlling for past performance, these results suggest that managerial ability is itself a significant credit rating factor. Cross‐sectional analyses indicate that managerial ability is beneficial specifically in firms facing financial or competitive pressure. We find that high‐ability managers mitigate the adverse impact on ratings of other credit risk factors including negative earnings and low interest coverage. Our results contribute to a growing literature documenting economic benefits to hiring and retaining high‐quality management.     

A statistic for random model testing

Variance of relative frequencies is shown to be a useful statistic for testing for the random model in social science research. An illustration from the sociology of science is provided to document the utility of the measure.     

Semantic cues in reference price advertisements: The moderating role of cue concreteness

Retailers use a variety of semantic cues to advertise discounts at their stores. In this paper we introduce the concept of cue concreteness and examine its impact on effectiveness of semantic cues. Four studies were conducted which concur with the findings of earlier research in this area and expand our knowledge about the effectiveness of semantic cues. Results indicate that between-store cues are perceived to be more effective than within-store cues at moderate price discount levels only when the cues are concrete in nature. In addition, a between-store cue resulted in more favorable evaluations than a within-store cue when the ad was viewed at home, but only when the cue was concrete. Implications for marketers and public policy makers are discussed.