This paper studies how the firm designs its internal information system when facing an adverse selection problem arising from unobservable managerial abilities. While more precise information allows the firm to make ex-post more efficient investment decisions, noisier information has an ex-ante...

Special Purpose Acquisition Companies (SPACs) have exploded in popularity in recent years. Their unique business model and structures beckon a comprehensive understanding of the incentives of SPAC sponsors and the implications of hidden information on the welfare of retail SPAC investors. This...

We study a firm's internal resource allocation using a dynamic principal-agent model with endogenous cash flow volatility. The principal supplies the agent with resources for productive use, but the agent has private control over both project volatility and resource intensity and may misallocate...

The search of valuable investment opportunities is one of the fundamental responsibilities of corporate managers. Existing studies of this search process usually model the investment opportunity as a binary signal and the role of the manager ends when such signal arrives. This paper studies a...

We employ novel methods to investigate optimal project management in a setting plagued by unavoidable setbacks. The contractor can cover up delays from shirking either by making false claims of setbacks or by postponing the reports of real ones. The sponsor induces work and honest reporting via...

Internal monitoring is a cardinal responsibility of the board of directors, many of which have been subject to relentless criticism of conceding too much power to the managers and allowing them too much latitude. We analyze the role of internal monitoring in a dynamic adverse selection model, in...

This paper examines the value of hedge fund activism from the perspective of activist hedge funds' investors. On average, an activist hedge fund's equity holdings of intervention targets do not perform differently from its own non-target holdings. However, its target holdings outperform its...

How do firms modify CEO risk-incentive compensation in response to increased foreign competition? Theoretically we show the answer is ambiguous: increased competition can result in firms either increasing or decreasing the CEO's risk-taking incentives. Empirically using a quasi-natural...