This paper shows that geographical and cultural elements could form an essential component of contract design in addition to more quot;traditionalquot; ingredients such as information and agency problems and the quality of legal institutions. Contracts between U.S. venture capitalists (VCs) and...

We view innovation investment as a real option and explore the implications of ambiguity (Knightian uncertainty) and risk for innovation decisions. Our analysis uses a risk measure and a new outcome-independent measure of ambiguity. We find a consistently significant negative effect of ambiguity...

We study how the popularity of an incumbent president can influence the generosity of the relief effort in response to a natural disaster as reflected in the federal SBA loan program. We document that the loan amounts relative to reported damages are higher when popularity of the incumbent...

This paper considers discrimination in the market for managerial positions by following the career paths of film directors. Film directors manage multi-million projects and are hired on a project by project basis. We gather data on directors’ film projects from the time they enter the...

Prior to the announcement of a tender offer, the bidding firm is legally allowed to acquire shares in the open market, subject to some limitations. These pre-announcement purchases are known as toeholds. This paper presents a simple model that describes the bidder's optimal toehold acquisition...

This paper presents a model in which asymmetric information and extreme uncertainty lead to the exclusive use of equity and riskless debt for small business financing. The paper derives these results without any restrictions on the available contract space, the distribution function governing a...

We show that geographical elements and regional culture can play an essential role in contract design in addition to the influence of more quot;traditionalquot; determinants such as information and agency problems or the nature of legal institutions. Across 1,800 financial contracts written...

This paper explores the market reaction to vertical mergers and incorporates into the analysis predictions based on I/O theories.We develop a classification to separate the various types of mergers, and focus on the determinants and wealth impacts of vertical mergers over the period 1979-2002....

We develop a model of corporate myopia in which the interaction between asymmetric information and short-term trading by the firm's equity holders induces firm managers to undertake short-term projects rather than long-term projects, which are intrinsically more valuable. In this setting, we...