We estimate a structural model of financing choices in presence of managerial moral hazard, financial distress costs and taxes. In the theoretical model, firms with low cost of managerial effort, and high financial distress costs and non--debt tax shields, find it optimal to issue equity....

The Internet reduces the cost of exchanging information. Electronic markets exploit this opportunity to enable investors to place quotes at very little cost and compete with incumbent trading systems. Does this quasi–free entry situation lead to competitive liquidity supply? We analyze trades...

We analyze theoretically and empirically the implications of heterogeneous information for equilibrium asset pricing and portfolio choice. Our theoretical framework, directly inspired by Admati (1985), implies that with partial information aggregation, portfolio separation fails, buy-and-hold...