We assume executives managing corporate financial policy consider the firm's current and target leverage, investment plans, anticipated cash flows, and consequences of alternative sequences of financing transactions, operating within efficient markets. Our analysis yields time-series and cross-sectional predictions for management of investment spending and leverage; use of maturity, priority, and convertibility covenants; and management of dividends, share repurchases, cash balances, and credit lines. Our evidence from 8608 SEOs covering 1970–2015 is consistent with implications of our theory, helps to resolve an array of issues in corporate finance, and offers a step toward a more unified analysis of rational corporate financial management.

Confidentially marketed public offers (CMPOs) represent a popular innovation in the market for seasoned equity offers (SEO) despite large negative announcement reactions. We find that CMPOs are often used by small firms with negative operating cash flows to raise a relatively substantial amount of capital, which is used largely for R&D intensive investments. We argue that the confidential marketing associated with CMPOs has made them a popular way for small firms to make fast-paced public offers, which are known to have reduced price pressure, while sidestepping the problem of inelastic demand. These firms are willing to trade off more negative announcement reactions for the chance to privately assess their prospects for raising capital.

We examine the extent to which directors with supply chain experience (DSCs) on corporate boards create informational advantages that improve strategies and outcomes related to mergers and acquisitions (M&A). Our results suggest that DSCs play a dual role by motivating value-enhancing acquisitions while simultaneously deterring value-destroying ones. The nature and extent of these effects depend on such factors as the size of the acquiring firm and the level of uncertainty in its operating environment. Furthermore, we find that DSCs are positively associated with abnormal announcement returns. Acquirers with at least one DSC outperform their counterparts without DSCs by 3.1% during a three-day window around the announcement. Our results hold after we address endogeneity concerns using multiple methods. Finally, we show that acquirer board representation by DSCs is positively related to post-merger operating performance and negatively related to the premium paid for the target.