This paper analyzes the interaction between financial leverage and takeover activity. We develop a dynamic model of …, and takeover terms, in which the bidder with the lowest leverage wins the takeover contest. Based on the resulting … bidder is below the industry average and that acquirers should lever up after the takeover consummation. The model also …

We develop a continuous-time real options pricing model to study managers’incentives to cheat in the presence of equity …-based compensation policies.We show that managers’ incentives to cheat are strongly influenced by theefficiency of the justice. Our model …’s main result is that managers havegreater incentives to misreport with stock options than with common stocks.We finally …