We consider a setting where a firm delegates an investment decision and, subsequently, a sales decision to a privately informed manager. For both decisions corporate income taxes have real effects. We show that compensating the manager based on pre-tax residual income can ensure after-tax...

We investigate the relation between dividend changes and future profitability, measured in terms of either future earnings or future abnormal earnings. Supporting quot;the information content of dividends hypothesis,quot; we find that dividend changes provide information about the level of...

We study the economic consequences of alternative hedge accounting rules in terms of managerial hedging decisions and wealth effects for shareholders. The rules we consider include the quot;fair-valuequot; and quot;cash-flowquot; hedge accounting methods prescribed by the recent SFAS No. 133. We...

In this study we investigate the relation between dividend changes and future profitability. We find that dividend changes are positively associated with future profitability after controlling for (i) past profitability, (ii) the effect of invested equity capital on past, current and future...

In this paper I use a principal-agent framework to explore the relation between the hierarchical structure of firms and the accounting information technologies available to them. I allow the principal to choose the number of layers in the firm, the number of agents in each layer, and the...

We consider a sequential delegation setting where a firm delegates an investment decision and, subsequently, a sales decision to a privately informed manager. For both these decisions, corporate income taxes have real effects. We show that compensating the manager based on pre-tax residual...

We study a model of imperfect competition and limited production capacity, in which a choice of low product quality enables firms to increase total production. We find that in the presence of limited capacity, such reduced quality often results in increased social welfare.We also explore the...