We show that stock liquidity increases the propensity of firms to raise debt capital. The positive effect of liquidity on a debt issuance propensity is much stronger in firms with greater default risk. The effect of liquidity on the cost of debt capital is much larger than its effect on the cost...

In hypercompetitive environments, are the “winners” talented or merely lucky? We answer this question by characterizing the relationship between talent, luck, and top performance in large competitions, where the number of competitors is unbounded. Our results imply that, for most standard...

We analyze a bargaining game in which one party, called the buyer, is the active player and has the option of choosing the sequence of negotiations with other participants, called sellers. If the negotiations are public, the sellers who are negotiated with late in the sequence are in stronger...

This paper develops and experimentally implements a simple multi-negotiation bargaining game, in which one agent, called the "developer," must reach agreements with a series of other agents, called "landowners," in order to implement a value-increasing project. The game has a unique subgame...

We examine auction design in a context where symmetrically informed buyers and sellers of a good with a common but uncertain value learn through experience. Buyer strategies, even in the very long run, do not converge to the Bertrand-Nash strategy of bidding the expected value of the good....

This paper documents that enhanced stock liquidity increases the propensity of firms to raise debt capital. The positive effect of liquidity on a debt issuance propensity is much stronger in firms with greater default risk. The reduction of the cost of debt driven by enhanced liquidity is much...

This paper compares the dutch auction and transferable put rights (TPRs) share repurchase mechanisms to the traditional fixed-price tender offer in terms of efficiency, wealth transfers, and corporate control. Using Monte Carlo simulations, it is shown that both alternative mechanisms reduce the...

This paper considers optimal compensation for a CEO who is entrusted with administering corporate assets honestly. Optimal compensation designs maximize integrity at minimum cost. These designs are very "low powered," i.e., while specifying a lower bound for performance and increasing pay with...

A common theme in the literature on corporate control is that, when share ownership is diffuse, the free-rider problem prevents raiders from making acquisitions at tender prices below the postacquisition share price. In this paper, we address this question by formulating a nonstandard model of...

Our analysis explains how vulture investors (vultures) can maintain and exploit their reputations for toughness. Vultures leverage their reputations to extract concessions from stockholders in debt restructurings. To profit from these concessions, vultures must first acquire debt from incumbent...