This paper uses the option pricing arguments of Merton (1974) to demonstrate that even solvent banks will be reluctant to sell volatile, toxic assets at market prices. Banks' shareholders have insolvency puts that give them limited liability in the event of default. The insolvency puts are more...

When a bank is deemed quot;too-big-to-failquot; by regulators, it may be tempted to buy risky assets. This paper analyzes bank bailouts involving the purchases of toxic assets, preferred stock, and common stock when the government wants to encourage efficient lending. It finds that preferred...

When a bank is deemed quot;too-big-to-failquot; by regulators, it may be tempted to buy risky assets. This paper analyzes bank bailouts involving the purchases of toxic assets, preferred stock, and common stock when the government wants to encourage efficient lending. It finds that preferred...

We look at the association between the price of a cryptocurrency and the secondary market prices of the hardware used to mine it. We find the prices of the most efficient Graphical Processing Units (GPUs) for Ethereum mining are significantly positively correlated with the daily price returns to...

In some cases, the incentives of the manager will affect the behavior of the firm’s employees. A manager with low-powered incentives will discourage employees from engaging in destructive rent-seeking activities. Union members will need to cooperate with this poorly compensated manager if the...

The Legacy Loans Program (LLP) is an elaborate way of slicing the Federal Deposit Insurance Corporation's (FDIC's) receivership assets. At best, the financial structure is irrelevant to the FDIC's expected long-run recovery rates. Yet, it may boost short-term prices by creating bond insurance...

Purpose – This paper aims to derive insights about optimal managerial compensation and firm capital structure in unionized firms. Design/methodology/approach – This paper uses applied game theory to address problems of CEO motivation in companies with unionized workforces. Findings –...