We develop a dynamic equilibrium model to derive the endogenous relations among firms' ownership structures, managerial incentives and asset returns. Ownership concentration is positively related to managerial incentives (PPS), but is negatively related to its expected stock (dollar) return and...

We develop a theory of how agency conflicts between the shareholders and debt holders of a financial institution, accounting measurement rules, and prudential capital regulation interact to affect the institution's capital structure and project choices. We show that, relative to a benchmark...

We develop a tractable general equilibrium model of banking under aggregate risk. Our novel framework includes the main tools of banking regulation—capital and liquidity requirements, deposit insurance and transfers—and shows how they interact and jointly emerge as an optimal response to the...

We explain the coexistence of “stock” and “mutual” organizational forms and their relative dominance in different insurance markets in a market equilibrium model. Insurer capital structures reflect the benefits and costs of equity, and the impact of insurer operating efficiencies. We...

We analyze 582 R&D agreements between Air Force agencies and outside partners. Agencies choose partners and contractual terms consistent with predictions from a rational model, which suggests that they could be incentive efficient from an ex ante perspective

We develop a tractable equilibrium model of competing firms in an industry to show how the distribution of firm qualities, moral hazard, and product market characteristics interact to affect firm size, managerial compensation, and market structure. Equilibrium effects cause different...

We develop a model to show how agency conflicts, free rider effects and monitoring costs interact to affect optimal team size and workers' incentive contracts. Team size increases with project risk, decreases with profitability, and decreases with monitoring costs as a proportion of output. Our...

We develop a unified model of the interactions among investors, fund companies and fund managers. We show that the interplay between a manager's incentives from her compensation structure and career concerns leads to a non-monotonic (approximately U-shaped) relation between her risk choices and...

We document empirical support for a key micro-level channel --- innovation by young, private firms --- through which financial sector deregulation affects economic growth. We find that intrastate banking deregulation, which increased the local market power of banks, decreased the level and risk...