Tirole (1982) is commonly interpreted as proving that bubbles are impossible with finitely many rational traders with common priors. We study a simple variation of his model in which bubbles can occur, even though traders have common priors and even though it is common knowledge that the asset...

Tirole (1982) is commonly interpreted as proving that bubbles are impossible with finitely many rational traders with common priors. We study a simple variation of his model in which bubbles can occur, even though traders have common priors and common knowledge that the asset has no fundamental...

The composition of risks assumed by U. S. commercial banks underwent a dramatic transformation over the years leading up to the financial crisis: between 2000 and 2006 idiosyncratic risk dropped by almost half while systematic risk doubled. These patterns, more pronounced in banks with heavy...

Linking managerial incentives to payoffs to shareholders provides managers with incentives to act in the shareholders' interest and to enhance shareholder value. Such alignment, when achieved through long-term equity stakes, also imposes risks on managers and leads to excessive managerial...

In this paper we examine the value of the right to design the method of sale of corporate assets. The question we ask is simple - who should have the right to decide how the assets of the firm should be sold? We show that this right is a valuable one and its value comes from recognizing the...

Tirole (1982) is commonly interpreted as proving that bubbles are impossible with finitely many rational traders with common priors. We study a simple variation of his model in which bubbles can occur, even though traders have common priors and even though it is common knowledge that the asset...

The extant literature on trade credit emphasizes its financing role wherein financially sound firms provide trade credit to ease the credit constraints of weaker trading partners. We offer an alternative, though not mutually exclusive, perspective in which trade credit serves as a commitment...

We develop and test hypotheses on the impact of target shareholders investment style preferences on the method of payment and premiums in acquisitions. Stock offers (unlike cash offers) allow target shareholders to defer capital gains taxes. This deferral value, however, depends on target...