We propose a new framework for the analysis of mutual funds and use it to examine the rationale behind existing regulations that require mutual fund adviser fees to be of the quot;fulcrumquot; variety. We find little justification for the regulations. Indeed, we find that asymmetric...

We use a model of information asymmetry and rent seeking to understand why management control becomes easier when a firm makes improvements that are translated into increasing sales. We show that increases in market share can lead to better information sharing if (1) workers make continuous...

This paper examines how product market competition is related to the impacts of cross-listing events for both the listing firms and their domestic non-cross-listed rivals. I find that issuing firms enjoy higher abnormal returns and greater subsequent market-share increases when they share more...

It has been reported in the literature on strategic auditing that audit risk (the probability of audit failure) may increase when the auditor obtains information, whereas conditions for such cases have not been identified as yet. This paper provides simple models to analyze the general...

Speculative attack models typically have multiple equilibrium solutions. When choosing the equilibrium strategy a trader faces Knightian uncertainty about the choice of the other traders. We show that the concept of Choquet expected utility maximization under Knightian uncertainty leads to...

This paper highlights the cross-country spread of self-fulfilling financial crises through an informational channel. It sets up a two-country framework of investment with strategic complementarities and incomplete information about economic fundamentals. Each market may be subject to sudden...

This paper formally identifies an important role of banks: Banks competitively internalize production externalities and facilitate economic growth. I formulate a canonical growth model with externalities as a game among consumers, firms, and banks. Banks compete for deposits to seek monopoly...

While there is an extensive literature on the theory of infinitely repeated games, empirical evidence on how the shadow of the future affects behavior is scarce and inconclusive. I simulate infinitely repeated prisoner's dilemma games in the lab with a random continuation rule. The experimental...

A model of insider trading is used to analyze the behavior of trading volume in financial markets characterized by asymmetric information. This model extends the one in Bhattacharya and Nicodano (2001) by introducing competition among informed traders and imperfection of their private...

The so-called disclosure principle is a 'puzzle' in the accounting literature: Game theoretic models of financial markets show that in equilibrium firms should disclose all their private information. Yet, the result is not convincing. Researchers have therefore built sophisticated models in...