We investigate the effect of line-of-business diversification on asset risk-taking in the U.S. property-liability industry. The coordinated risk management hypothesis (Schrand and Unal, 1998) implies a negative relation between underwriting risk and investment risk. Consistent with this...

The most important financial source for behavioral economics is the Russell Sage Foundation (RSF). The most prominent behavioral economists among the RSF’s twenty-six member Behavioral Economics Roundtable (BER) are Kahneman, Tversky, Thaler, Camerer, Loewenstein, Rabin, and Laibson. The...

The paper analyzes the last three decades of debates on predatory pricing in US antitrust law, starting from the literature which followed Areeda & Turner 1975 and ending with the early years of the new century, after the Brooke decision. Special emphasis is given to the game-theoretic approach...

Summary • Putin and Trump, leaders arguably with hostile powers. Their meeting holds significant importance in history, requiring scenario planning to structure long-term business relationships and a defense playground for both countries.• It will provide assurances; to the operating...

The history of predatory pricing law and economics is peculiar on account of the seemingly inescapable contradiction between the legal habit of condemning a business practice on account of its possible unfair and inefficient effects and the necessity of providing an economic rationale for the...

We identify the tension created by the dual demands of financial institutions to be value-maximizing entities that also serve the public interest. We highlight the importance of information in addressing the public's desire for banks to be safe yet innovative. Regulators can choose several...

Surveys of corporate risk management document that selective hedging, where managers incorporate their market views into firms’ hedging programs, is widespread in the U.S. and other countries. Stulz (1996) argues that selective hedging could enhance the value of firms that possess an...

We show that managerial overconfidence, which has been found to influence a number of corporate financial decisions, also affects corporate risk management. We find that managers increase their speculative activities using derivatives following speculative gains, while they do not reduce their...

This paper examines the price effects following credit rating revisions. We find a new return series after the announcement of credit downgrades. Contrary to the most recent US studies by Griffin and Sanvicente (1982), Holthausen and Leftwich (1986), Hand et al. (1992), and Dichev and Piotroski...

I study the effect of increasing competition on financial performance through labor leverage. To capture competition, I exploit variation in product market contestability in the U.S. airline industry. First, I find that increasing competitive pressure leads to increasesing labor leverage,...