This paper develops a theory of how organizations make timing decisions. We consider a problem in which an uninformed principal decides when to exercise an option and needs to rely on the information of an informed but biased agent. This problem is common in firms: examples include headquarters...

In most countries, large corporations are controlled by a few very wealthy individuals or families. However, whether a large concentration of control over major assets leads to poor financial development remains an open question. In this article, we present a political economy model of financial...

We study games in which the decision to exercise an option is a signal of private information to outsiders, whose beliefs affect the utility of the decision-maker. Signaling incentives distort the timing of exercise, and the direction of distortion depends on whether the decision-maker's utility...

We study simultaneous security-bid second-price auctions with competition among sellers for potential bidders. The sellers compete by designing ordered sets of securities that the bidders can offer as payment for the assets. Upon observing auction designs, potential bidders decide which auctions...

Traditional real options models demonstrate the importance of the "option to wait" due to uncertainty over future shocks to project cash flows. However, there is often another important source of uncertainty: uncertainty over the permanence of past shocks. Adding Bayesian uncertainty over the...

type="main" <title type="main">ABSTRACT</title> <p>Using data on auctions of companies, we estimate valuations (maximum willingness to pay) of strategic and financial bidders from their bids. We find that a typical target is valued higher by strategic bidders. However, 22.4% of targets in our sample are valued higher by...</p>

We provide a dynamic model of an industry in which agents strategically time liquidation decisions in an effort to protect their reputations. As in traditional models, agents delay liquidation attempting to signal their quality. However, when the industry faces a common shock that...

We provide a real-options model of an industry in which agents time abandonment of their projects in an effort to protect their reputations. Agents delay abandonment attempting to signal quality. When a public common shock forces abandonment of a small fraction of projects irrespective of...

This paper studies optimal design of a capital allocation system in a firm in which the division manager with empire-building preferences privately observes the arrival and properties of investment projects, and the headquarters is able to audit each project at a cost. Under certain conditions,...

This paper studies the interaction between takeover activity, means of payment (cash versus stock), and premiums in a dynamic real-options model. The timing of takeovers and the equilibrium bids in contests with multiple bidders are driven by three factors: synergies of the bidder with the...