We develop an arbitrage-free and complete framework to price options on the stocks of firms involved in a merger or acquisition deal allowing for the possibility that the deal might be called off at an intermediate time, creating discontinuous impacts on the stock prices. Our model can be a...

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 nonmonotonic (approximately U-shaped) relation between her risk choices and...

We examine the financing choices of undiversified owner-managers in a continuous-time model. Managers' financing choices as well as their dynamic equity stakes, which trade off their private benefits and the costs they incur due to their lack of diversification, are simultaneously and...