We study investment options in a dynamic agency model. Moral hazard creates an option to wait and agency conflicts affect the timing of investment. The model sheds light, theoretically and quantitatively, on the evolution of firms' dynamics, in particular the decline of the failure rate and the...

This essay surveys the body of research that asks how the efficiency of corporate investment is influenced by problems of asymmetric information and agency. I organize the material around two basic questions. First, does the external capital market channel the right amount of money to each firm?...

This paper aims to shed light on the long-standing debate on opportunistic and information perspectives of earnings management from a controlled laboratory experiment. Our results are in favor of the moral hazard explanation over the explanation based on the signaling motive. When we introduce a...