We analyze a publicly-traded firm's decision to stay public or go private, focusing on the stochastic nature of investor participation in the public market. The liquidity of public ownership is both a blessing and a curse: it facilitates trading and lowers the cost of capital, but it also...

We analyze a publicly-traded firm's decision to stay public or go private, focusing on the stochastic nature of investor participation in the public market. The liquidity of public ownership is both a blessing and a curse: it facilitates trading and lowers the cost of capital, but it also...

We analyze an entrepreneur/manager's choice between private and public ownership. The manager needs decision-making autonomy to optimally manage the firm and thus has an endogenized control preference that is traded off against the higher cost of capital accompanying greater managerial autonomy....

In this paper we ask: what kind of information and how much of it should firms voluntarily disclose? Three types of disclosures are considered. One is information that complements the information available only to informed investors (to-be-processed complementary information). The second is...

We review the economics of bank regulation as developed in the contemporary literature. We begin with an examination of the central aspects of modern banking theories in explaining the asset transformation function of intermediaries, optimal bank liability contracts, coordination problems...

In this paper we analyze an entrepreneur/manager's choice between private and public ownership in a setting in which management needs some quot;elbow roomquot; or autonomy to optimally manage the firm. In public capital markets, the corporate governance regime in place exposes the firm to...

The banking landscape is in flux. Financial institutions and markets have become deeply intertwined and competitive pressures have intensified. Stability issues have become paramount, aptly illustrated by the credit crisis of 2007-2009. In this paper we review the existing literature to analyze...

This paper will appear as the lead chapter in a readings book on corporate finance, financial intermediation and market microstructure. The unifying theme in the book is optimal design, and various chapters deal with the design of contracts, securities, institutions, market mechanisms, and...

In this paper we introduce flexibility as an economic concept and apply it to the firm's security issuance decision and capital structure choice. Flexibility is the ability to make decisions that one thinks are best even when others disagree. The firm's management values flexibility because it...

We develop an economic theory of quot;flexibilityquot;, which we interpret as the discretion or ability to make a decision that others disagree with. We show that flexibility is essentially an option for the decisionmaker, and can be valued as such. The value of the flexibility option is...