In this paper, we examine acquisitions of two financially distressed retailers-Federated's takeover of Macy's, and Zell Chilmark's takeover of Carter Hawley Hale. In both cases the raider purchased some of the target's outstanding debt to launch its takeover attempt. These debt purchases appear...

In this article, the authors show that the evolution of managerial entrenchment can distort investment horizons. Both myopic and hypermetropic distortions can arise. The direction of these distortions is determined by the locus of control and their pervasiveness by the degree of management...

We examine auction design in a context where symmetrically informed adaptive agents with common valuations learn to bid for a good. Despite the absence of private valuations, asymmetric information, or risk aversion, bidder strategies do not converge to the Bertrand–Nash equilibrium strategies...

This paper documents the short- and long-term balance sheet effect of cash flows. We show that cash savings in the short run and debt reduction in both the short and the long run account for a substantial fraction of cash flow use. Although, in the long run, investment exhibits substantial...

I model the determination of management compensation through the strategic interaction among outside shareholders, managers, and corporate boards. The board sets both regular incentive compensation and discretionary special compensation unrelated to performance. We show that shareholder value...

This paper develops a new theory of multinational capital structure based on legal-system arbitrage: The optimal capital structure for the multinational minimizes the value of the ex post opportunism options created by the diverse legal systems under which the multinational operates. This theory...

We model long-run firm performance, management compensation, and corporate governance in a dynamic, nonstationary world. We show that managerial compensation and governance policies, which, in a single-period context, can best be rationalized by self-serving managerial influence over board...

Optimal shareholder bidding strategies in a dutch auction share repurchase are derived when shareholder heterogeneity could be due to either differential expectations regarding the firm's future earnings or differential tax bases. Predictions of the theory are tested by analysing the actual...

In an asymmetric information framework, a number of authors have demonstrated the existence and uniqueness of short-term debt pooling equilibria in the absence of dissipative costs. We show that short-term debt pooling is robust to a broad range of deviations from stationarity and intertemporal...