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We examine the relationship between corporate tax avoidance and reliance on trade credit. Using a sample of US listed firms during the period 1987–2017, we show that tax-avoiding firms rely more on supplier-provided trade credit as a source of financing. We take advantage of the 'check-the-box' regulation introduced in 1997 as an exogenous shock to firms' tax strategies. The findings from the difference-in-differences design suggest a causal interpretation of our results. We also observe that the relationship between tax avoidance and trade credit is more salient for a sub-sample of firms with: (i) more information asymmetry; and (ii) more financing constraints. These findings remain robust to a battery of sensitivity analyses and endogeneity concerns. In an additional analysis, we find that corporate tax avoidance increases firms' reliance on trade credit by reducing access to bank loans. Overall, we provide evidence that tax avoidance has important implications for a valuable alternative source of financing: trade credit. [ABSTRACT FROM AUTHOR]

We examine the relationship between brand capital and firms' credit ratings. Using a sample of 5,787 publicly listed U.S. firm-year observations over the 1994–2017 period, we provide evidence that firms with higher levels of brand capital are associated with more favorable credit ratings. In cross-sectional analyses, we find that this relationship is more salient for firms with higher levels of information asymmetry and more financial and distress risk, and for firms with weak governance. In additional analysis, we find a negative relationship between brand capital and the implied cost of equity capital. Our results are robust to alternative measures of brand capital, an alternative regression model and endogeneity tests. Overall, our findings suggest that brand capital captures important financial and non-financial information, and that credit rating agencies, sensibly, consider brand capital in their assessment of firms' credit worthiness. [ABSTRACT FROM AUTHOR]

• We examine how strategic deviation affects idiosyncratic return volatility (IRV). • Firms that strategically deviate from industry peers are related to higher IRV. • This relationship is weaker for firms with transparent information environments and better corporate governance. • Strategic deviation increases earnings volatility and cash flow volatility. This study examines the relationship between strategic deviation and idiosyncratic return volatility (IRV). Using a large sample of U.S. public firms, we find that firms that strategically deviate from industry peers are related to higher IRV. This relationship is weaker for firms with transparent information environments and better corporate governance. Robustness tests show that our results are not affected by endogeneity problems. Additional analyses reveal that strategically deviant firms are associated with higher earnings volatility and cash flow volatility. Taken together, we reveal that strategic deviation has important implications for firms' risk. [ABSTRACT FROM AUTHOR]

This study examines the association between market risk disclosures (MRDs) and the investment efficiency of financial firms from six emerging markets in the Gulf Cooperation Council (GCC) region. Based on a sample of 553 firm-year observations over the 2007-2011 period, we find that MRDs are significantly and negatively associated with both under-investment and over-investment and that this association is more pronounced for larger firms. We also find that the association between MRDs and under-investment is moderated during periods of economic distress such as the Global Financial Crisis of 2008 and that the association between MRDs and over-investment is magnified during periods of reduced financial distress. Our results are consistent with the idea that MRDs reduce information asymmetry, which ultimately improves investment efficiency. We contribute to the literature in an emerging market context by providing empirical evidence on the association between MRDs and investment efficiency across six emerging GCC capital markets. This study also fills a gap in the literature by providing evidence on the factors affecting the investment efficiency of financial firms. [ABSTRACT FROM AUTHOR]

• We examine the relationship between strategic deviation and debt maturity structure. • Strategic deviation is positively associated with short-term debt. • This relationship is driven by both information asymmetry and corporate governance. • Strategic deviation has important implications for corporate financing decisions. We examine the relationship between strategic deviation and debt maturity structure. Using a large sample of US publicly listed firms from 1981 to 2020, we find that strategic deviation is positively associated with short-term debt. We also find that this relationship is driven by both direct and indirect channels (information asymmetry and corporate governance channels). Our finding remains robust to a series of sensitivity analyses and endogeneity tests. Taken together, we show that strategic deviation has crucial effects on corporate financing decisions. [ABSTRACT FROM AUTHOR]

• We examine the relationship between corporate culture and the use of bank debt. • Firms with superior corporate culture are associated with less bank debt. • Both information asymmetry and corporate governance channels explain the result. • Corporate culture has important implications for firms' bank debt. We examine the relationship between corporate culture and the use of bank debt. We find that U.S. firms with superior corporate culture are associated with less bank debt. We also find that this finding is driven mainly by the teamwork, innovation, and quality dimensions of corporate culture. Our channel analysis shows that the negative relation between corporate culture and bank debt is driven by both information asymmetry and corporate governance channels. Overall, we show that corporate culture has important implications for firms' bank debt. [ABSTRACT FROM AUTHOR]