Using a novel method to separate US community banks over the 1984-2013 period from their non-community counterparts we compare the two bank types on the basis of cost efficiency. We decompose cost efficiency into a persistent and a residual component; the former capturing the market structure...

Behavioural Corporate Finance (BCF) examines the effects of managerial and investor psychological biases on a firm's corporate finance decisions (such as investment appraisal and capital structure). In contrast to the well-developed research in behavioural finance (which examines the effects of...

We consider the effect of auditor tenure on the level of managerial fraud and the extent of auditor qualification of reports. We consider two conflicting effects. As auditor tenure increases, the auditor's ability to detect fraud increases, which reduces the manager's fraud incentives. On the...

I consider the effects of entrepreneurial inequity-aversion on financial contracting with a self-interested venture capitalist, in a single-sided and double-sided moral hazard setting. In the pure principal-agent model, as the proportion of self-interested entrepreneurs in the population...

We examine the combined effects of managerial overconfidence, asymmetric information and moral hazard problems on the manager's choice of financing (debt or equity). We demonstrate the following; a) in the asymmetric information model, overconfidence is unambiguously bad. It induces excessive...

We develop a model of Bertrand competition in differentiated products, in order to examine the relationship between product market competition and financial leverage. Leverage softens price competition by inducing firms to discount the future more heavily. We consider potential intensity and...

A popular misconception among practitioners and academics is that repurchasing shares can increase the share price, since total earnings and market capitalization are spread over a smaller number of shares outstanding. I present a numerical example that demonstrates the fallacy of this view. I...

I analyze manager and venture capitalist bargaining over the financial contract in the face of double-sided moral hazard problems. The allocation of cash flows depends on the combined effects of value-adding services, reputation seeking, and bargaining power. Welfare is maximized when the...

We develop a game-theoretic analysis of an entrepreneur's choice between venture capital financing or crowdfunding in order to finance his new innovative start-up. If he chooses venture capital, the venture capitalist provides value-creating effort (in addition to the E's own effort). However,...

This paper is a case study-based investigation of aspects of the current paradigmatic approach to ‘good' corporate governance with its focus on the interlinked roles of internal control and risk management procedures, internal audit and external audit, overseen and co-ordinated by a formal...