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Securitization is a financial innovation that experiences a boom-bust cycle, as many other innovations before. This paper analyzes possible reasons for the breakdown of primary and secondary securitization markets, and argues that misaligned incentives along the value chain are the primary cause...
Persistent link: https://www.econbiz.de/10014213869
The traditional view on CEO pay suggests that the use of equity-based incentives (e.g., stocks and options) should increase when stock prices become more informative about managerial action. In this paper, we show this is only true in the relative sense, when comparing with CEOs'...
Persistent link: https://www.econbiz.de/10013116442
We present a model to study the role of earnings management in explaining the properties of asset prices and stock market participation. We demonstrate that limited market participation can arise endogenously in the presence of earnings management. Our model generates novel predictions on how...
Persistent link: https://www.econbiz.de/10013098787
We provide a new framework for using text as data in empirical models. The framework identifies salient information in unstructured text that can control for multidimensional heterogeneity among assets. We demonstrate the efficacy of the framework by re-examining principal-agent problems in...
Persistent link: https://www.econbiz.de/10012898019
The role of institutional investors on the register constitutes a significant puzzle. Concentrated investors could intervene (i.e., exercise 'voice') so as to improve firm governance mechanisms. Alternatively, acting as informed traders, they could effectively discipline management if they adopt...
Persistent link: https://www.econbiz.de/10013158338
How does entrepreneurial financing differ from traditional financing? This study sheds new light on this central question of entrepreneurial finance literature by exploring the distinctive role of soft information in a high-tech start-up’s debt financing. Entrepreneurial investors can obtain...
Persistent link: https://www.econbiz.de/10011991358
We investigate the impact of managerial investment diversion on a firm's investment paths and the investment-return relation in a dynamic q-theory model. When efficiency of investment is not observed by shareholders, the manager may divert investment for private benefits. An agency investment...
Persistent link: https://www.econbiz.de/10011659514
We address the moral hazard problem of securitization using a principal-agent model where the investor is the principal and the lender is the agent. Our model considers structured asset-backed securitization with a credit enhancement (tranching) procedure. We assume that the originator can...
Persistent link: https://www.econbiz.de/10011783323
We develop a dynamic adverse selection model where a career-concerned buy-side analyst advises a fund manager about investment decisions. The analyst's ability is privately known, as is any information she learns over time. The manager wants to elicit information to maximize fund performance...
Persistent link: https://www.econbiz.de/10012849367
Many financial arrangements reference market prices that are yet to be realized at the time of contracting and consequently susceptible to manipulation. Two of the most common such arrangements are: (i) market-on-close contracts, which reference the price prevailing at the end of an execution...
Persistent link: https://www.econbiz.de/10012852314