This paper examines the impact of uncertainty on the profitability of vertical and horizontal foreign direct investment (FDI). Vertical FDI takes place when the multinational fragments the production process internationally, locating each stage of production in the country where it can be done...

We develop an assignment theory to analyze the volume and composition of foreign direct investment (FDI). Firms conduct FDI by either engaging in greenfield investment or in cross-border acquisitions. Cross-border acquisitions involve firms trading heterogeneous corporate assets to exploit...

This paper documents the speed of evolution (or lack thereof) of a range of values and beliefs of different generations of US immigrants, and interprets the evidence in the light of a model of socialization and identity choice. Convergence to the norm differs greatly across cultural attitudes....

We construct a model of revolution and transition to democracy under individualistic and collectivist cultures. The main result is that, despite facing potentially larger collective action problems, countries with an individualistic culture are more likely to end up adopting democracy earlier...

By reducing the threat of a hostile takeover, business combination (BC) laws weaken corporate governance and increase the opportunity for managerial slack. Consistent with the notion that competition mitigates managerial slack, we find that while firms in non-competitive industries experience a...

Mutual fund managers can outperform the market by picking stocks or timing the market successfully. Previous work has estimated picking and timing skill, assuming that each manager is endowed with a fixed amount of each and found some evidence of picking skills and little evidence of timing...

This paper studies optimal policy in a business-cycle setting in which firms have a blurry understanding of the state of the economy due to informational or cognitive constraints. The latter are not only the source of nominal rigidity but also an impediment in the coordination of production. The...

We survey the theory and evidence of behavioral corporate finance, which generally takes one of two approaches. The market timing and catering approach views managerial financing and investment decisions as rational managerial responses to securities mispricing. The managerial biases approach...

We study the interplay of share prices and firm decisions when share prices aggregate and convey noisy information about fundamentals to investors and managers. First, we show that the informational feedback between the firm's share price and its investment decisions leads to a systematic...