In this paper we analyze a publicly-traded firm's decision to stay public or go private in a setting in which managerial autonomy from shareholder intervention affects the supply of productive inputs by management. With public ownership, the shareholder base of the firm is subject to stochastic...

This paper examines the determinants of organizational scale and scope, with applications to various industries, including financial services. We build a model in which new opportunities arise for firms, but the skills needed to exploit them effectively are unknown. Early investments in these...

The structure of the financial services industry is in flux. Liberalization, deregulation, and advances in information technology have changed the financial landscape dramatically. Interbank competition has heated up and banks face increasing competition from nonbanking financial institutions...

We examine how the firm's initial owners design the control rights of bondholders and new shareholders and the manner in which these control rights interact with the manager's choice of the firm's capital structure. Even though the manager's objective is to maximize the terminal wealth of the...

The increasingly competitive environment poses challenges to bankers. This paper emphasizes relationship banking as a prime source of the banks' comparative advantage. The proliferation of transaction-oriented banking (trading and financial market activities) does however seriously challenge...

We analyze a publicly-traded firm's decision to stay public or go private when managerial autonomy from shareholder intervention affects the supply of productive inputs by management. We show that both the advantage and the disadvantage of public ownership relative to private ownership lie in...

In this paper we address two related puzzles: (i) why do firms issue equity when stock prices are high and (ii) why do firms so often not issue securities to counteract the mechanical effect of their stock returns on their leverage ratios? Our theory builds on the importance of managerial...

This paper provides an explanation for the urge of banks to merge and expand scope. We build a model where bank activities evolve over time. Due to deregulation and technological advances, new opportunities become available, but the skill needed to exploit them effectively may be unknown. Early...