We examine optimal equity-based incentives for the Board of Directors (BOD) in a hierarchical agency framework. The underlying agency problem is due to a shareholder-manager conflict on investment policy. There is an endogenous demand for directors to monitor the quality of the firm's investment...

By addressing the interaction between security market microstructure and the generalized agency conflict between managers and shareholders, we study the effects of informed insider trading on productive efficiency, price discovery, and wealth redistribution. Insider trading can lead...

Recent corporate governance reforms focus on board independence and encourage equity ownership by directors. We analyze the efficacy of these reforms in a model where both adverse selection and moral hazard are present at the level of the firm's management. Delegating governance to the board...

Opportunity cost is a central concept in decision making. It is difficult to measure because it is the value associated with opportunities foregone. In this paper, we characterize three time-based dimensions of resources to help understand and estimate opportunity costs. These dimensions capture...

Recent studies in the accounting literature provide evidence of a market premium whenever firms meet or exceed analysts' earnings forecasts. Financial analysts typically issue revenue forecasts in addition to earnings forecasts. In this study, we draw our motivation from the cue consistency...

A debt financing transaction that is structured to avoid explicit liability recognition is known as off-balance sheet financing (OBSF). Purported benefits from OBSF include raising cheaper debt by guaranteeing debt repayments unencumbered by current debt contracts, maintaining desired...

The purpose of this paper is to examine the importance attached to revenue forecasts by firms and the market, and whether these forecasts are value-relevant conditional on earnings forecasts. We address two related questions. First, we examine whether the capital market reaction to earnings (and...

We examine the principal's preference for a public predecision information system that produces a signal about a parameter of the firm's production function. We show that the discreteness of action space plays a crucial role in establishing the principal's preference for suppressing the release...

In this paper we provide new insights into the motives underlying insider participation in private investments in public equity (PIPEs) by considering the association among insider participation, pricing, and contractual terms. PIPEs are a financing choice that have become popular over the last...

Using an agency theory framework, we examine the effect of managerial overconfidence on the interaction between planning and control problems. We consider a typical setting in which a manager makes an investment decision involving project selection and a production decision to implement the...