Does corporate governance affect the timing of large investment projects? Hazard model estimates suggest strong shareholder governance may deter managers from pursuing large investments. Controlling for investment opportunities, firms with good governance experience longer spells between large investments. However, in the presence of financial constraints or strong CEO incentives (high delta (δ)), we find no such timing differences. Finally, these higher investment hazard firms exhibit significantly negative long-run operating and stock performance. Overall, our findings are consistent with the notion that poor governance associates with overinvestment.

We document a capital supply channel in peer effects, for the case of SEOs. Firms accelerate their SEOs – they have higher SEO hazards – when more of their peers conducted an SEO within the prior six months. The effect is stronger among older yet constrained firms than among younger yet unconstrained firms. It is also stronger after Russell index shocks that likely reduce indexer demand for a firm's equity. We document evidence of a potential underlying mechanism; information conveyed by underwriters that recently marketed SEOs of peers, thus reducing asymmetric information costs.