This paper examines the accuracy of equity analysts who provide earnings forecasts for European companies. We find strong evidence of institutional bias in analysts’ forecasts, specifically, when analysts move between sell-side employers and independent employers, they issue more accurate...

type="main" <p>The authors examined the market reaction to announcements of 208 corporate offers to repurchase outstanding debt during the period 1989–1996. In most tender offers, debtholders receive either a fixed price or a fixed spread over a benchmark Treasury security, or a range of prices...</p>

We study the problem of compensating a manager whose career concerns affect his investment strategy. We consider contracts that include cash, shares, and call options, focusing on the role of options in aligning incentives. We find that managers are optimally paid in cash, supplemented by a...

We study the use of stochastic discount factor (SDF) models in evaluating the investment performance of portfolio managers. By constructing artificial mutual funds with known levels of investment ability, we evaluate a large set of SDF models. We find that the measures of performance are not...

We examine the effect of stock options on managerial incentives to invest. Our chief innovation is a model wherein firm value and executive decisions are endogenous. Numerical solutions to our model show that managerial incentives to invest are multi-dimensional and highly sensitive to option...

We examine the effects of securitization on two dimensions of consumer mortgage costs: coupon rates and loan origination fees. We find no evidence that securitization reduces the coupon rates on fixed or adjustable-rate mortgages. Instead, securitization appears to lower mortgage loan...