Owners exploit the strong separation between ownership and control in pyramiding to establish control over several firms' internal cash flows via a very small capital investment. We establish that the large discounts on the pyramid holding company as well as on the portfolio firms at the bottom...

We investigate whether the use of dual class shares affect the financial policy within firms. We distinguish between firms that are controlled by owners with poor portfolio diversification (families) and those controlled by owners with diversified portfolios (institutions). Our findings suggest...

We run an online experiment with 408 finance professionals (money managers) and 550 subjects from the general population in Sweden (clients). We examine drivers of clients' delegation decisions, differences in decision-making quality between both groups, and professionals' ability to implement...

By running a battery of incentivized and non-incentivized experiments with fund managers from four countries in the European Union, we investigate the impact of fund managers' cognitive skills and economic preferences on the dynamics of the mutual funds they manage. First, we find that fund...

To study whether clients benefit from delegating financial investment decisions to an agent, we run an investment allocation experiment with 408 finance professionals (agents) and 550 participants from the general population (clients). In several between subjects treatments, we vary the mode of...

Some studies have provided evidence that hedging increases firm value. Other studies have shown that managerial incentives may influence firm hedging. In this paper we provide evidence that hedging increases firm value, however, when hedging is based upon incentives caused by managers' options,...

Employees in Swedish firms have the legal right to be represented on the company board. However, in a considerable share of Swedish listed firms, this option is not exercised. This paper asks why that is the case. We use a simple framework, based on rational choice by individual employees. Our...

This paper uses agent-based simulation to analyze how financial markets are affected by market participants with convex incentives, e.g. option-like compensation. We document that convex incentives are associated with (i) higher prices, (ii) larger variations of prices, and (iii) larger bid-ask...

We investigate the impact of fund managers' tournament incentives on investment strategies and market efficiency, distinguishing between winner-take-all tournaments (WTA), where a minority wins, and elimination contests (EC), where a majority wins. Theoretically, we show that fund managers play...