Corporate Governance and the Cost of Debt: Evidence from Director Limited Liability and Indemnification Provisions

We find that firms that provide limited liability and indemnification for their directors enjoy higher credit ratings and lower yield spreads. We argue that such provisions insulate corporate directors from the discipline from potential litigation, and allow them to pursue their own interests by adopting low-risk, self-serving operating strategies, which coincidentally redound to the benefit of corporate bondholders. Our evidence further suggests that the reduction in the cost of debt may offset the costs of directorial shirking and suboptimal corporate policies occasioned by this insulation, which may explain why stockholders have little incentive to rescind these legal protections

Wave Modes in the Magnetospheres of Pulsars and Magnetars

We study the wave propagation modes in the relativistic streaming pair plasma of the magnetospheres of pulsars and magnetars, focusing on the effect of vacuum polarization. We show that the combined plasma and vacuum polarization effects give rise to a vacuum resonance, where ``avoided mode crossing'' occurs between the extraordinary mode and the (superluminous) ordinary mode. When a photon propagates from the vacuum-polarization-dominated region at small radii to the plasma-dominated region at large radii, its polarization state may undergo significant change across the vacuum resonance. We map out the parameter regimes (e.g., field strength, plasma density and Lorentz factor) under which the vacuum resonance occurs and examine how wave propagation is affected by the resonance. Some possible applications of our results are discussed, including high-frequency radio emission from pulsars and possibly magnetars, and optical/IR emission from neutron star surfaces and inner magnetospheres.Comment: 19 pages, 10 figures. Accepted by MNRA