We examine the effects of secondary market liquidity on firm value and the decision to conduct an Initial Public Offering (IPO). Competitive liquidity provision can lead to market failure as the IPO either does not occur or the IPO price is discounted to reflect that some welfare-enhancing...

While some financial markets increasingly rely on endogenous liquidity provision by ldquo;high frequencyrdquo; traders, others also contract with ldquo;designated market makersrdquo; who commit to provide more liquidity than they would otherwise choose. We identify two reasons that such...

We show that banks significantly under-report the risk in their trading book when they have lower equity capital. Specifically, a decrease in a bank's equity capital results in substantially more violations of its self-reported risk levels in the following quarter. The under-reporting is...