We model restructuring when hedge funds with expertise in navigating distress intervene. Whether hedge funds help distressed firms or act like vultures are two sides of the same coin. Interventions help when firm prospects are bright and assets are not easily redeploy-able. Interventions are...

Prior research suggests that executive option grants that do not quickly vest provide managers with better incentives to pursue long-term, rather than short-term, objectives. Previous research also suggests that the pursuit of long-term objectives may be undermined by the risk of early...

In this paper we model the spillovers from the restructuring of a financially distressed firm on other firms and the feedback effects from the restructuring. Our results indicate that the spillover and feedback effects are complex and are determined by several factors including the level of...

This paper uses a disaggregated approach to study the volatility of common stocks at the market, industry, and firm levels. Over the period 1962-97 there has been a noticeable increase in firm-level volatility relative to market volatility. Accordingly correlations among individual stocks and...

The dramatic rise and fall of the Japanese equity market provides a unique opportunity to examine market-and firm-specific risks over different market conditions. The price behavior of Japanese equities in the 1990s is found to resemble that of U.S. equities during the Great Depression. Both...

It is well known that 70% of individual stocks' returns are classified as idiosyncratic returns under a conventional asset pricing model. In this study, we raise an important question as to whether majority return variations are truly influenced by idiosyncratic risks that at most affect several...