This paper presents an asymmetric information model of share repurchases when shareholders have heterogeneous reservation values. Consistent with empirical evidence, managers in the model repurchase shares at a premium above the post- repurchase share value - transferring wealth from...

We analyze capital allocation in a conglomerate where divisional managers with uncertain abilities compete for promotion to CEO. A manager can sometimes gain by unobservably adding variance to divisional performance. Capital rationing can limit this distortion, increase productive efficiency,...

This paper examines investment and financing policy in quot;fully revealingquot; equilibria--equilibria in which information asymmetries are resolved. Since all securities are priced correctly in a fully revealing equilibrium, it seems plausible that such equilibria would be free of the well...

This paper presents an asymmetric information model of share repurchases when shareholders have heterogenous reservation values. Consistent with empirical evidence, managers in the model repurchase shares at a premium above the post-repurchase share value--transferring wealth from shareholders...

We develop a dynamic model of the adoption of financial innovations. Each period, firms decide whether or not to adopt an innovation of uncertain value, and the profitability of each period's adoptions reveals information about the innovation?s value. We show that characteristics of financial...

When monitoring is not contractible - so investors monitor only when, at that time, they expect to benefit from doing so - efficient contracts sometimes induce managers to make false reports to investors. Because of monitoring discretion, management misrepresentation can produce Pareto...