[Using eight thousand public companies, we study the impact of the Sarbanes-Oxley Act (SOX) of 2002 and other contemporary reforms on directors and boards, guided by their impact on the supply and demand for directors. SOX increased directors' workload and risk (reducing the supply), and increased demand by mandating that firms have more outside directors. We find both broad-based changes and cross-sectional changes (by firm size). Board committees meet more often post-SOX and Director and Officer (D&O) insurance premiums have doubled. Directors post-SOX are more likely to be lawyers/consultants, financial experts, and retired executives, and less likely to be current executives. Post-SOX boards are larger and more independent. Finally, we find significant increases in director pay and overall director costs, particularly among smaller firms.]

We present evidence that a tax bill containing antitakeover provisions proposed by the U.S. House Ways and Means Committee on October 13, 1987 and approved by the Committee on October 15 was the fundamental economic event causing the greater than 10% decline in the stock market on October 14–16, which arguably triggered the October 19 crash. The bill, which eventually passed without most of the antitakeover provisions, would have limited the deductibility of interest on debt incurred to finance corporate takeovers, leveraged buyouts and recapitalizations, and imposed other restrictions on hostile takeovers.

The authors have been editors of the Journal of Corporate Finance for nineteen years and are now stepping down. Here we offer some observations from our years as editors of the Journal. We hope they are useful to the new editors, the publisher, referees and authors. Thank you to all those who helped us in our task as editors.

Promotion decisions for professors are critical for any university and this is especially true when promotion also involves the granting of tenure. In this paper, we report the number of publications for Finance professors promoted to Associate or Full Professor at schools similar to the University of Georgia and also at the Top 10 Finance Departments. We also provide evidence on citations of the individuals' research. Our data reveal similarities in terms of the total number of articles published (between 6 and 8 for promotion to Associate Professor), the number of articles published in Finance “A” journals (about 3), and the number of citations between peer and aspirant schools. We find evidence that Associate Professors at Top 10 Departments have slightly more “A” articles and receive more citations to their work than those at lower ranked institutions. We find similar results for those promoted to Full Professor – similar publication records but with more “A” publications and citations for those in Top 10 Departments. Our paper provides up-to-date information on some of the factors considered for promotion of Finance professors. However, the much more difficult part of promotion decisions is determining the impact of past research and the potential for future contributions. In addition, teaching, service, and other departmental contributions are key to the promotion decision.

We evaluate the costs and benefits of restrictive covenants in bonds issued in 1989 and 1996. Our results indicate that firms with growth opportunities are more likely to seek to preserve flexibility in future financing activities by not including dividend or debt issuance restrictions in their bond contracts. We do not find, however, that the use of other restrictive covenants is significantly lower for firms with high investment opportunities. Instead, the use of these other covenants is primarily driven by the issuing firm's likelihood of financial distress. Our results emphasize that contractual relations between firms and bondholders reflect the specific needs of the contracting parties.

We examine how political, institutional, and economic factors are related to a country’s decision to privatize state-owned banks. Using a panel of 101 countries from 1982 to 2000, we find that political factors significantly affect the likelihood of bank privatization only in developing countries. Specifically, in non-OECD countries, bank privatization is more likely the more accountable the government is to its people. In contrast, none of our political variables affects the bank privatization decision in developed countries. Economic factors (such as the quality of the nation’s banking sector) are significant determinants of bank privatization in both OECD and non-OECD nations.

This study surveys the literature examining the privatization of state-owned enterprises (SOEs) We review the history of privatization, the theoretical and empirical evidence on the relative performance of state owned and privately owned firms, the types of privatization, if and by how much privatization has improved the performance of former SOEs in non-transition and transition countries, how investors in privatizations have fared, and the impact of privatization on the development of capital markets and corporate governance. In most settings privatization “works” in that the firms become more efficient, more profitable, and financially healthier, and reward investors.

Using 8,000 public companies we study the impact of the Sarbanes-Oxley Act (SOX) and other contemporary reforms on directors and boards, guided by their impact on the supply and demand for directors. SOX increased director workload and risk (reducing the supply), and increased demand by mandating that firms have more outside directors. We find both broad-based changes and cross-sectional changes (by firm size). Board committees meet more often post SOX and Director and Officer (D&O) insurance premiums doubled. Directors post SOX are more likely to be lawyers/consultants, financial experts and retired executives, and less likely to be current executives. Post-SOX boards are larger and more independent. Finally, we find significant increases in director pay and overall director costs, particularly among smaller firms.?

We use a well-developed dynamic panel generalized method of moments (GMM) estimator to alleviate endogeneity concerns in two aspects of corporate governance research: the effect of board structure on firm performance and the determinants of board structure. The estimator incorporates the dynamic nature of internal governance choices to provide valid and powerful instruments that address unobserved heterogeneity and simultaneity. We re-examine the relation between board structure and performance using the GMM estimator in a panel of 6,000 firms over a period from 1991 to 2003, and find no causal relation between board structure and current firm performance. We illustrate why other commonly used estimators that ignore the dynamic relationship between current governance and past firm performance may be biased. We discuss where it may be appropriate to consider the dynamic panel GMM estimator in corporate governance research, as well as caveats to its use.