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Anti-evasion auditing policy in the presence of common income shocks

Sanchez-Villalba, Miguel - London School of Economics (LSE) - 2006

When fairly homogeneous taxpayers are affected by common income shocks, a tax agency’s optimal auditing strategy consists of auditing a low-income declarer with a probability that (weakly) increases with the other taxpayers’ declarations. Such policy generates a coordination game among...

Persistent link: https://www.econbiz.de/10010928739

Peering into the mist: social learning over an opaque observation network

Barrdear, John - London School of Economics (LSE) - 2014

I present a model of social learning over an exogenous, directed network that may be readily nested within broader macroeconomic models with dispersed information and combines the attributes that agents (a) act repeatedly and simultaneously; (b) are Bayes-rational; and (c) have strategic...

Persistent link: https://www.econbiz.de/10011126293

The more we know, the less we agree: public announcements and higher-order expectations

Kondor, Peter - London School of Economics (LSE) - 2004

The stylized fact that public announcements in financial markets are followed by intense trading, high trading volume and volatile prices, is widely perceived as the sign of increasing disagreement due to the announcement. However, it is common to argue that this would be inconsistent with...

Persistent link: https://www.econbiz.de/10011071459

Block-booking and IPO share allocation: the importance of being ignorant

Gondat-Larralde, Celine; James, Kevin R. - London School of Economics (LSE) - 2004

Given the opportunity to buy IPO shares of uncertain value at a fixed price, potentially informed investors have an incentive to refuse to participate in offerings the underwriter happens to overprice. We show that an underwriter can efficiently resolve this problem by entering into a repeat...

Persistent link: https://www.econbiz.de/10010745055

Loan securitisation: default term structure and asset pricing based on loss prioritisation

Jobst, Andreas A. - London School of Economics (LSE) - 2002

Ambivalence in the regulatory definition of capital adequacy for credit risk has recently stirred the financial services industry to collateral loan obligations (CLOs) as an important balance sheet management tool. CLOs represent a specialised form of Asset-Backed Securitisation (ABS), with...

Persistent link: https://www.econbiz.de/10010745131

IPO underpricing during the boom: a block-booking explanation

James, Kevin R. - London School of Economics (LSE) - 2004

A bank can efficiently underwrite individually difficult to value IPOs by offering them as a package deal to a stable coalition of investors (block-booking). Block-booking banks set offer prices to equalize downside risk across their offerings, not expected returns. Examining US IPOs over the...

Persistent link: https://www.econbiz.de/10010745328

Agency, firm growth, and managerial turnover

Anderson, Ronald W.; Bustamante, Maria Cecilia; … - London School of Economics (LSE) - 2012

We study the relation between firm growth and managerial incentive provision under moral hazard when a long-lived firm is operated by a sequence of managers. In our model, firms replace their managers not only upon poor performance to provide incentives, but also when outside managers are at a...

Persistent link: https://www.econbiz.de/10010745265

Mark-to-market accounting and systemic risk: evidence from the insurance industry

Ellul, Andrew; Jotikasthira, Chotibhak; Lundblad, … - London School of Economics (LSE) - 2013

mark-to-market accounting. Many have proposed the use of historical cost accounting, promoting its ability to avoid the … amplification of systemic risk. We caution against focusing on the accounting rule in isolation, and instead emphasize the … interaction between accounting and the regulatory framework. First, historical cost accounting, through incentives that arise via …

Persistent link: https://www.econbiz.de/10011171756

A theory of supervision with endogenous transaction costs

Faure-Grimaud, Antoine; Laffont, Jean-Jacques; … - London School of Economics (LSE) - 1998

We propose a theory of supervision with endogenous transaction costs. A principal delegates part of his authority to a supervisor who can acquire soft information about an agent's productivity. If the supervisor were risk-neutral, the principal would simply make the better informed supervisor...

Persistent link: https://www.econbiz.de/10010928775

Foreign exchange intervention and macroeconomic stability

Vitale, Paolo - London School of Economics (LSE) - 2001

Using a standard monetary policy model, we study how foreign exchange intervention may be used to condition the perception among economic agents of the objective of the policymaker. Foreign exchange intervention does not bring about a systematic policy again, such as an increase in the...

Persistent link: https://www.econbiz.de/10010745697

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