Recent research finds that firms characterized by high corporate transparency have a greater proportion of independent directors. The direction of the causality of this relation, however, is unclear. One branch of the governance literature takes corporate transparency as fixed and shows that the...

This paper examines when information asymmetry among investors affects the cost of capital in excess of standard risk factors. When equity markets are perfectly competitive, information asymmetry has no separate effect on the cost of capital. When markets are imperfect, information asymmetry can...

US CEOs hold a large amount of equity that is not explicitly constrained by ownership guidelines or vesting requirements. Although the average CEO receives a risk premium in his annual pay for holding unconstrained equity, most CEOs hold more equity than is compensated by the risk premium in...