This paper develops a theory of corporate hedging in a financial contracting framework. In an economy with moral hazard and state uncertainty, the optimal financial contract incorporates both non-monitoring (arm's length) finance and monitoring (bank) finance, and its payoff is equity-like. When...

Using a recent sample of firms subject to SEC litigations for fraud and employing a detection-controlled estimation technique, we find that equity-based executive compensation (EBC) is positively related to both the probability of fraud commission and the probability of being prosecuted by the...

We study the agency implications of increased disclosure using a regulatory change in the mutual fund industry as an experimental setting. This quasi-natural experiment mandated more frequent portfolio disclosure, which we show imposes managerial skill re-assessment risks from investors on funds...