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In addition to being a function of traditional fundamentals such as cash-flow persistence and the discount rate, the equilibrium association between a security price and a value-relevant statistic can simply be a function of what rational investors believe the association will be. We refer to...
Persistent link: https://www.econbiz.de/10013020848
Many argue that uncontested director elections are meaningless because director nominees are almost surely elected. We assess whether the outcomes of uncontested director elections still serve as an informative poll of investor perceptions regarding board performance. We find that higher (lower)...
Persistent link: https://www.econbiz.de/10012709650
Markets have a remarkable capacity for producing efficient resource allocations when information about relative values is dispersed across economic agents. We explore the use of market mechanisms inside the firm to address a resource allocation problem, and compare the outcome with the first-...
Persistent link: https://www.econbiz.de/10012756956
Private organizations that produce public goods commonly accept restricted contributions. We analyze a model in which the voluntary acceptance of a restricted contribution can force an organization to alter the nature of public goods produced, which we call mission capture. Our analysis...
Persistent link: https://www.econbiz.de/10012849612
We develop a model to explain the value and consequences of investment screens, which are commonly employed by sophisticated investors. In the model, some stock-market investors are uncertain about the quality of private information before they acquire it and, in equilibrium, rationally use...
Persistent link: https://www.econbiz.de/10012829021
We characterize the steady-state equilibrium in which informed traders who exhibit heuristic (i.e., representativeness, as opposed to Bayesian) and Bayesian behaviors achieve the same expected utility. Then, we show how the endogenous, steady-state proportion of heuristic traders is affected by...
Persistent link: https://www.econbiz.de/10012715168
Persistent link: https://www.econbiz.de/10009349839
We consider the design of contracts in a principal-agent setting with two agents where each agent privately observes and reports to the principal a signal regarding the actions taken. We consider two cases: one where the agents observe the same signal and one where the agents observe different...
Persistent link: https://www.econbiz.de/10005241803
Persistent link: https://www.econbiz.de/10004356304
We analyze the effect of external financing concerns on managers' financial reporting behavior prior to management buyouts (MBOs). Prior studies hypothesize that managers intending to undertake an MBO have an incentive to manage earnings downward to reduce the purchase price. We hypothesize that...
Persistent link: https://www.econbiz.de/10009214505