We develop a theory of organization design in which the firm's structure is chosen to mitigate moral hazard problems in the selection and the implementation of projects. For a given set of projects, the 'divisional structure' which gives each agent the full responsibility over a subset of...

We consider the bankruptcy law and workout practices in the United States and model bankruptcy as a strategic decision. We analyze a firm's choice between liquidation under Chapter 7, renegotiation of the debt contract in a workout, and reorganization under Chapter 11 of the bankruptcy code. Our...

We develop a theory of organization design in which the firm's structure is chosen to mitigate moral hazard problems in the selection and the implementation of projects. For a given set of projects, the divisional structureʺ which gives each agent the full responsibility over a subset of...

We propose a new test of motives to be a public firm that is based on the observation that firms can become public by issuing either equity or debt. Thus, one can examine the determinants of the private-public decision by comparing firms that are public with equity to firms that are public with...

The literature has identified two different processes by which innovation of new products presents itself. The first, the Technology Push process, occurs when the innovation of a new product is spurred by a technology that the entrepreneur possesses. The second, the Market Pull process, occurs...

This study presents a theory of incorporation mode selection. It outlines when economic units should incorporate as stand-alone firms vs. an integrated firm (conglomerate). The theory suggests that an integrated firm better controls agency problems through manager competition for project...