We study rating shopping on the MBS market. Outside of AAA, losses were higher on single-rated tranches than multi-rated ones, and yields predict future losses for single-rated tranches but not for multi-rated ones. Conversely, ratings have less explanatory power for single-rated tranches. These...

A major threat to the development of financial markets in emerging markets is “tunneling.” In China, this took on the form of controlling shareholders diverting assets from listed firms or coercing firms to serve as guarantors on questionable loans. A new set of rules enacted in 2005...

Examining a large sample of firms with ownership information from Japan, we find firms that belong to business groups (“keiretsu”) pay more cash dividends than non-keiretsu firms, especially when the affiliated dividend-receiving firms have better investment opportunities, are in financial...

We document the reversal of privatization in China—local governments re-possessing ownership stakes in a quarter of previously privatized firms from 1998–2007. Privatized firms are ‘renationalized' to ease the burden of unemployment in local labor markets. Firms located in provinces with a...

We investigate the power structure of the Chinese political system and its implications on corporate sectors. We document large-scale ‘re-nationalization' — local government re-possessing controlling ownership stakes in previously privatized firms during the period 1999-2007. Firms located...

We document large-scale reversal of privatization in China — local governments taking back shares in a quarter of previously privatized firms. Politicians who are not affiliated with any of the dominant political factions are more likely to waver under pressure and adopt renationalization...

In this paper we offer an explanation for the empirical anomaly that most raiders do not acquire the maximum possible toehold prior to announcing a takeover bid. By endogenously modeling the target value following an unsuccessful takeover we demonstrate that a raider may optimally choose to...

We model how firms motivate their risk-averse managers to evaluate new investment projects as well as to manage assets-in-place. We first consider a two-agent model: an Innovator in charge of project adoption and a Producer in charge of production. The Innovator's effort produces better...

In 2002 and 2003, many Chinese banks implemented reforms that delegated authority to individual loan officers. The change followed China's entrance into the WTO and offers a plausibly exogenous shock to loan officer incentives to produce information. We find that the bank's internal risk rating...

We examine the role of high-water mark provisions in hedge fund compensation contracts. In our model of competitive markets and asymmetric information on manager ability, a fee contract with a high-water mark can improve the quality of the manager pool entering the market. In addition, a...