Why, when, and who terminates their mortgages? The primary reasons for mortgage termination are refinancing, selling of the property, and default. This paper is the first to explicitly model these competing risks within a unified conceptual framework and provide a link between theoretical value...

Real estate markets, for both commercial real estate and single family homes, typically responds to a large negative demand shock with a period during which the volume of transactions and liquidity of real estate declines. Explanations for these periods have focused on overly optimistic owners,...

Using data from the recent referendum in Britain to leave the E.U., we document a link between political uncertainty and real estate values. Specifically, we find that real estate values in areas of London that have a high concentration of E.U. passport holders declined significantly more than...

We show economic depreciation decreases value maximizing investment hurdle rates and encourages both maintenance and growth. Economic depreciation without maintenance decreases the upside potential of future growth opportunities upon stochastically improved profitability. Managers forestall this...

We investigate the timing of business expansion. With an indefinite sequence of growth opportunities that have constant returns to scale, current investment neither displaces nor impairs future returns. In a dynamic setting with expansion restricted to a fraction of firm size, the endogenously...

A key requirement for the start of many entrepreneurial businesses is private equity or venture capital financing. In the traditional approach to entrepreneurial investment analysis, an entrepreneur starts a new venture, and a venture capitalist finances the new venture, when business return...

We show that the value maximizing hurdle rate for Ramp;D is less than for conventional investment despite the fact that Ramp;D has development risk. Because development risk arises only during Ramp;D, entrepreneurs control this risk by pursuing or deferring Ramp;D. This risk management moderates...

The variation in managerial compensation across countries and industries for firms of similar size is staggering. We analyze this phenomenon in a continuous time model of the firm, where the economic environment evolves stochastically over time and where changes to the firm operations are...

This paper investigates the impact of spatially correlated unobservable variables on the refinancing, selling, and default decisions of mortgage borrowers. Virtually the entire mortgage literature acknowledges that borrower specific characteristics, such as culture, education, or access to...