Recognizing the role and value of diverse stakeholders, firms pursing a "beyond profit" agenda are becoming increasingly common. This paper studies such hybrid entities - firms that value the profits they create as well as the surpluses generated for consumers - and details their implications...

When a firm's input supplier can acquire private information to gain an edge in negotiations, we show that the firm can blunt the supplier's informational advantage by permitting cost inefficiencies in internal production. Specifically, we establish that a modest increase in the cost of the...

Corporate insiders face substantial restrictions on stock sales, but many have viewed receiving tax deductions from charitable donations of stock holdings as an attractive alternative. In fact, empirical evidence consistently indicates that executives even make use of their private information...

It is often noted that accounting information, while faithfully estimating current profitability, fails to reflect forward-looking information about new ventures. Stock prices, however, reflect the prevailing sentiment about both current and future activities. As a result, though accounting is...

The centrality of private information in the design of accounting institutions has been explored via agency models that address control concerns as well as disclosure models that amplify valuation issues. Somewhat surprisingly, the joint analysis of control and valuation considerations, and...

The role of investment rationing by one party to discipline reporting of private information by another is well recognized. Formally, adverse selection models succinctly capture this effect via the crisp information rents vs. efficiency tradeoff. This paper takes a different slant to investment...

A firm's stock price may reveal information that the firm itself might not want to share. In particular, stock price may reveal information about future demand, which when learned by a rival undercuts the firm's competitive position. This paper establishes that when a firm discloses cost...

A manager’s short-term focus (myopia) is typically viewed as detrimental to the firm’s interests. In contrast, studying a voluntary disclosure model wherein both capital market and product market strategic considerations are in play, this paper shows that the manager’s myopic behavior can...

In this paper we examine a simple but suggestive setting in which the income number arises naturally (and directly) from competitive markets. While no explicit assumptions are made about individual firm's objectives, it turns out that equilibrium is consistent with the maximization of a number...

We formally establish the link between linear algebra and the double entry bookkeeping system: the system transforms a vector of numerical values corresponding to transaction amounts to a financial statements vector through matrix multiplication. The matrix is called a generator matrix (it is...