Firms often undertake activities that do not necessarily increase cash flows (e.g., costly investments in corporate social responsibility, or CSR), and some investors value these non-cash activities (i.e., they have a "taste" for these activities). We develop a model to capture this phenomenon...

This study examines the costs and benefits of uniform accounting regulation in the presence of heterogeneous firms who can lobby the regulator. A commitment to uniform regulation reduces economic distortions caused by lobbying by creating a free-rider problem between lobbying firms at the cost...

In this paper we examine a setting where agents can form lobbying coalitions to influence a policy-maker. Policy uniformity causes agents to free ride on each other's lobbying and gives them an incentive to form lobbying coalitions. We investigate when coalitions are formed by similar or...

This paper theoretically and empirically shows that, when investors are uncertain about how precise is the signal they receive, their beliefs may further diverge after they receive the same piece of information. We test this prediction using trading volume around quarterly earnings announcements...

In this paper, we consider the price effects of risk disclosure. We develop a model in which investors are uncertain about the variance of a firm's cash flows and the firm releases an imperfect signal regarding this variance. In our model, uncertainty over the riskiness of a firm's cash flows...