Growing Out of Trouble? Corporate Responses to Liability Risk

By Todd A. Gormley, David A. Matsa. 2011

438 citations recorded by the source corpus.

Subfields: Accounting, Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/08024d222aa3ebdfe097ce8444375a5e18b494d9

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Accounting

In Economics and Econometrics

Citations in the corpus

How Does Corporate Investment Respond to Increased Entry Threat (2015, neutral): “repeat our baseline nonparametric matching but match on relative-to-industry median covariates, as in Gormley and Matsa (2012). Columns 8 and 9 of Table 4 indicate that these changes in the matching procedure have no bearing on the results.”
Do employee-friendly firms invest more efficiently? Evidence from labor investment efficiency (2020, positive): “The agency view argues that managers may treat employees well to derive private benefits (Jensen and Meckling, 1976) and some studies find that employee-friendly treatment can be a manifestation of agency problems, thus hampering firms’ performance (Atanassov and Kim, 2009; Ben-Nasr and Ghouma, 2018”
Do Firms Engage in Risk-Shifting? Empirical Evidence (2016, positive): “survey evidence from Graham and Harvey (2001) suggests that risk-shifting concerns are the least important factor for CFOs in determining the maturity of debt a rm issues as well as whether a rm issues convertible bonds.”
Playing It Safe? Managerial Preferences, Risk, and Agency Conflicts (2016, methodology): “More recently, Gormley and Matsa (2011) find that when faced with an increase in left-tail risk, managers aggressively try to reduce risk through diversifying acquisitions and acquisitions of cash cows (firms with significant cash flow and payouts).”
ESG Shareholder Engagement and Downside Risk (2018, background): “2 corporate investment and corporate risk-taking (Gormley and Matsa, 2011; Gormley, Matsa, and Milbourn, 2013).”
Shareholder Litigation and Corporate Disclosure: Evidence from Derivative Lawsuits (2017, background): “One concern is that including covariates that may be affected by the treatment can undermine the ability to draw causal inferences (Gormley and Matsa [2014], Imbens and Rubin [2015]). Hence, in the first two columns, we do not include any time-varying firm-level covariates. Specifically, in column (”
Debt Enforcement, Investment, and Risk Taking Across Countries (2013, background): “to take on too much risk—the risk-shifting effect of Jensen and Meckling (1976) .”
Shareholder Litigation Rights and the Cost of Debt: Evidence from Derivative Lawsuits (2018, positive): “To address this empirical difficulty, we follow Gormley and Matsa (2011) and Appel (2016) and create a cohort for each adoption of UD laws.”
Climate Regulatory Risks and Corporate Bonds (2020, positive): “The result is also consistent with previous literature that shows that ﬁrms’ cost of debt increases with political uncertainty risk and increased liability risk (Bradley et al., 2016; Gormley and Matsa, 2011).”
The pricing of green bonds: Are financial institutions special? (2019, background): “Another strand of literature recognizes that some firms are particularly exposed to liability risks including litigation, new technology, and regulation (Hong and Kacperczyk, 2009; Gormeley and Matsa, 2011).”
CEO Compensation and Corporate Risk: Evidence from a Natural Experiment (2013, positive): “Consistent with a decline in shareholders' desired investment, Gormley and Matsa find that shareholders prefer for managers to pay out more cash after the tail risk increases. Given the drop in desired investment, boards have reason to reduce managers' exposure to their firms' risk. With fewer risky”