In the first part of the paper, we explore two alternative explanations for the role of stars in the movie business. The first approach is that informed insiders signal project quality by hiring an expensive star. The second is the quot;rent capturequot; hypothesis, namely, that stars receive...

Prior to a takeover bidders have the option to purchase a toehold in the target firm at market prices. Yet, despite the availability of this option empirical studies show that in many cases firms purchase very small or no toeholds. This is somewhat puzzling since current theoretical models...

We develop a model of corporate myopia in which the interaction between asymmetric information and short-term trading by equity holders induces firms to undertake short-term rather than long-term projects, which are intrinsically more valuable. We study the effectiveness of alternative policy...

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...

Theater shows routinely turn-over actors in lead roles. Otherwise the show stays the same, including the director, the script, other actors and the physical theater environment. Even the lines uttered do not change. Therefore, the theater provides a unique laboratory for assessing the value of...

We analyze new Swedish data on the portfolio holdings of large blockholders and find that firm value increases with the weight of a stock in a large blockholder's portfolio. In our sample, this weight may be greater than 50%. We are the first to show that this value premium is correlated with...

The theater provides a quasi-natural experiment for testing the direct impact of key personnel changes in complex organizations. Theater shows routinely turn-over actors in lead roles for a variety of reasons. However, all other elements of the show remain in place, including the director, the...

There is a growing literature on the differential impact of soft' vs. hard' information on organizational structure and behavior. This study is an attempt to empirically quantify the value of soft information, using a data-base on the market for screenplays. Script quality is difficult to...

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 investigates the design of privatization mechanisms in emerging market economies. We identify an emerging market economy by the political constraints that limit the set of viable privatization mechanisms. Our objective is to explain the striking diversity of privatization mechanisms...