This paper explores the role of testing in models of asymmetric information. The authors demonstrate conditions under which testing for underlying characteristics can overcome adverse selection problems and lead to a full-information competitive equilibrium. This paper provides a more general...

This paper presents a theory of the disciplinary role of takeovers based on an explicit model of managerial incentive problems stemming from a symmetric information. It is argued that an informed raider can reduc e incentive problems by making managerial compensation more sensitive to...