This appendix provides derivations and additional results for “Seller Debt in Acquisitionsof Private Firms: A Security Design Approach.” Section A provides some background definitions andsimple mathematical identities used in the subsequent sections. Section B provides derivations for those...

We model and test the relations between the team management of mutual funds, fund manager ability, fund performance, and holdings. Our model predicts that team-managed funds will perform better, allocate their funds more conservatively, and trade less aggressively than single-manager funds....

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...

This paper develops a new theory of CEO compensation based on the opacity of the internal workings of corporations to outsiders and the CEO's ability to divert or tunnel corporate resources to self-enriching uses. In this setting, neither high powered option compensation nor fixed salary...

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...

This paper models, and experimentally simulates, the free-rider problem in a takeover when the raider has the option to quot;resolicit,quot; that is, to make a new offer after an offer has been rejected. In theory, the option to resolicit, by lowering offer credibility, increases the dissipative...

This paper models the capital structure of a multinational firm. The analysis shows that differences between legal systems in the enforcement of creditor rights, (recently documented by empirical research) can explain the complex mix of parent and subsidiary financing observed in most...

We analyze a financially-distressed firm,indebted to a number of creditors who hold claims of (perhaps) different priority. The firm's owners have the option of choosing the sequencing of restructuring negotiations with creditors. Both the cases of public and confidential negotiations are...

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 model corporate governance in a world with competitive securities markets as well as markets for corporate assets. We show that varying the liquidity and opacity of corporate assets, the vitality of the market for corporate control, and the costs of enforcing shareholder rights to cash flows...