In this paper we show the possibility of existence of preferred stocks in a tax induced equilibrium. We show that the Miller equilibrium framework can accommodate more than two securities if different investor classes are taxed differently and the tax schedule is not flat. The introduction of...

We explain the puzzling empirical evidence on the investory accounting choice through a management signaling argument. We assert that firms with lower nominal production costs than other firms have relatively less to gain from the tax advantages assocaited with LIFO adoption. For these firms,...

This paper shows that under some plausible assumptions about the distributions of returns and the utility functions of the investors the CAPM holds in every single period even if investors have multiperiod diverse investment horizons. This hold even when portfolio returns are dependent over...

This paper examines the evidence for stability in the income-velocity of money by allowing for the effects of the housing and stock markets. It is shown that much of the hitherto unexplained behavior of the income velocity (the so-called "velocity puzzle") can be explained by housing...

We provide an explanation for loan commitments unrelated to borrower credit-worthiness. In our model, banks can use loan commitments to reduce uncertainty regarding their own future funding needs. Given a cost advantage to banks that can acquire such information, there exists an equilibrium...