This article solves a model that links earnings quality to the equity risk premium in an infinite-horizon consumption CAPM economy. In the model, risk-averse traders hold diversified portfolios consisting of a risk-free bond and shares of many risky firms. When constructing their portfolios,...

This article embeds an oligopolistic industry structure in a real options framework in which synergy gains of horizontal mergers arise endogenously and vary stochastically over time. We find that (i) mergers are more likely in more concentrated industries; (ii) mergers are more likely in...

This paper develops a continuous time real options model to study the interaction between industry structure and takeover activity. In an asymmetric industry equilibrium, firms have an endogenous incentive to merge when restructuring decisions are motivated by operating and strategic benefits....

This article provides an insightful overview of the challenges encountered by the insurance industry when applying the requirements of IFRS 17 to reinsurance contracts. Through the metaphor "Fitting a Square Peg in a Round Hole," the author effectively captures the complexities and difficulties...

This paper studies the interaction between product market competition and takeover activity. We develop a dynamic model in which profit-maximizing production decisions of all firms in an industry as well as the timing and terms of a merger between two firms are jointly determined. We show that...

This paper develops a real options framework to analyze the behavior of stock returns in mergers and acquisitions. In this framework, the timing and terms of takeovers are endogenous and result from value-maximizing decisions. The implications of the model for abnormal announcement returns are...

Numerous studies have examined the effect on credit spreads of renegotiation. These studies have generally focussed on the impact on spread levels in general, and not on how renegotiation influences the relative pricing of senior versus junior debt claims. In this paper, we show that the scope...

This paper examines the impact of agency conicts on corporate nancing decisions. Werst build a dynamic contingent claims model in which nancing policy results from a trade-obetween tax benets, contracting frictions, and agency conicts. In our setting, partially-entrenched managers set the rms'...

In the Yes/No game, like in the ultimatum game, proposer and respondercan share a monetary reward. In both games the proposer suggests a rewarddistribution which the responder can accept or reject (yielding 0-payoffs). Thegames only differ in that the responder does (not) learn the suggested...