This paper shows how main bank rent extraction affects corporate decisions about investment and financing and then the banking system itself under changing contracting conditions. Interestingly, during the transition from a relationship-oriented financial system to a transaction-based...

Rights offers and new issues to non-existing shareholders are two major flotation methods used in seasoned equity offerings (SEOs) worldwide. Yet the existing literature has been unable to explain within the same framework: (a) why some firms choose rights offers and other firms choose new...

While a close firm-bank relationship mitigates market imperfections, recent research has suggested that insider banks often impose 'holdup' costs. This paper presents a model of how main bank rent extraction affects corporate decisions about investment and financing, and how the high-flying...

Opportunities for controlling shareholders to expropriate minority shareholders come largely from insider information. These opportunities and hence private benefits of control, largely under asymmetric information, can vary substantially across firms even within the same legal environment. As a...

This paper generalizes the Myers and Majluf (1984) model by introducing an agency cost structure based on private benefits of control. This new model predicts that many corporate finance variables each have opposing effects on under- and overinvestment. Private benefits exacerbate overinvestment...

The literature has documented positive announcement effects for privately placed seasoned equity issues. This study shows positive announcement effects not only for private but also for public placements in Hong Kong. Our unique data offer new insights not obtainable from U.S. data as we examine...

Using Fama and French's (1998) framework, we investigate how firm value is related to financing decisions and corporate governance, during and after the Japanese deregulation (1974 to 1997). We find that there is rich information about firm value from financing decisions. The value information...

In implementing a variance-minimizing cross or delta hedge, the regression coefficient is often estimated using data from the past, but one could also use estimators that are suggested by the random-walk or unbiased-expectations models and require just a single price. We compare the performances...

Although the Fama-French three-factor model captures most CAPM anomalies, it still fails to explain return momentum. This paper shows that the incorporation of conditioning information into an asset-pricing model is one way to capture return momentum. Results from the conditional regression with...

This paper analyzes and values European-style options on the minimum or the maximum of two average prices. In particular, we provide a closed-form pricing formula for the option with geometric averaging starting at any time before maturity. Our numerical evidence shows that the use of the...