In this note, a loss shared by the security holders of merging firms is pointed out: separate corporate entities provide double protection against future negative cash flows that are partof any production process (e.g., when customer or employee liabilities exceed future income), independent of...

We analyze a model in which firms signal their quality by using financial policies to commit to cash outflows. Two financial policies may be used: dividend and debt-service obligations. We find sufficient conditions for the informational equilibrium to entail concommitant use of both dividends...

The purpose of this book is to review the theory and empirical evidence regarding the impact of dividend policy on shareholder wealth. It cuts to the quick of such long-standing questions as Why do corporations pay dividends? and Why should investors care? With relevant anecdotes, surveys,...

The optimal conditions for taking a company public, as well as the circumstances for reversing this decision, are analyzed.First, a model of the entrepreneur's decision to go public is used to define the value function of the firm and to derive its properties.In the model, the timing of the...

Past literature suggests that success rates in professional basketball are independent of past performance and has been interpreted as evidence that the commonly-shared belief in Hot Hands (HH) is a cognitive illusion. This is often cited as evidence of biased decision-making even when financial...

This paper analyzes a unique data set of IPOs that were conducted as non-discriminatory (i.e., uniform price) auctions. Our data include the full demand schedules for auctioned IPOs conducted in Israel. To the best of our knowledge, this is the first time the whole demand schedule for any asset...

Despite the fact that stock market efficiency has been tested in numerous studies and through several approaches, it is still not clear to what extent stock prices correctly reflect information. The inability to test whether stock prices correctly incorporate information stems from the infinite...

We propose a new test of motives to be a public firm that is based on the observation that firms can become public by issuing either equity or debt. Thus, one can examine the determinants of the private-public decision by comparing firms that are public with equity to firms that are public with...