It is well-established that non-profit hospitals employ performance bonuses with much lower frequency than for-profit hospitals. Weisbrod (1999, 2003a, 2003b) suggest that this implies that principals of non-profit and for-profit firms have different objectives or purposes. Brickley and Van Horn...

We demonstrate how a golden parachute can be used to improve the target shareholders' net return by partially shifting the managerial compensation burden to the buyer through a higher acquisition price. Consistent with the empirical observations, we show that (1) the golden parachute will be...

We demonstrate how a golden parachute can be used to improve the target shareholders' net return by partially shifting the managerial compensation burden to the buyer through a higher acquisition price. Consistent with the empirical observations, we show that 1) golden parachute will be...

An important difference between intra-firm and inter-firm transactions is that the former takes place under the governance of a quot;headquarters,quot; which often remains aloof from the transaction yet retains ultimate authority over it. We show that when trading parties' relationship-specific...

Preliminary agreements—variously labeled as memoranda of understanding, letters of intent, term sheets, commitment letters or agreements in principle—are common in complex business transactions. They document an incomplete set of terms that the parties have agreed upon, while anticipating...

In mergers and acquisitions transactions, a buyer and a seller will often agree to contractual mechanisms (deal protection devices) to deter third parties from jumping the deal and to compensate a disappointed buyer. This paper analyzes various deal protection devices, with a focus on two most...

This amicus brief, filed with the Delaware Supreme Court in Verition Partners v. Aruba Networks, addresses two topics: (i) application of the efficient market hypothesis in appraisal litigation and (ii) empirical scholarship regarding the effect of Delaware appraisal decisions and amendments to...

An entrepreneur can organize either a for-profit or a non-profit firm to sell product or service to consumers in the long run. Because quality is non-verifiable and unobservable investment can still produce low quality, in equilibrium, consumers impose relational sanctions when low quality is...

A potentially dangerous product is supplied by a competitive market. The likelihood of a product-related accident depends on the unobservable precautions taken by the manufacturer and on the type of the consumer. Contracts include the price to be paid by the consumer ex ante and stipulated...

This paper examines how post-closing contingent payment (PCP) mechanisms, such as earnouts and purchase price adjustments, can facilitate mergers and acquisitions transactions. The paper examines two informational environments: in the first, the seller has superior information about the value of...