Discussion Papers

In many bilateral transactions, the seller fears being underpaid because its outside option is better known to the buyer. We rationalize a variety of...

Private equity sponsors pay special attention to designing capital structure, making buyouts an interesting setting for examining capital structure...

We use a comparative approach to study the incentives provided by different types of compensation contracts, and their valuation by risk averse...

Using data from 1983 to 2010, we propose a new fear measure for Treasury markets, akin to the VIX for equities, labeled TIV. We show that TIV explains...

We use the recent introduction of biofuels to study the effect of industry factors on the relationships between wholesale commodity prices...

We propose that an active takeover market provides incentives by offering acquisition opportunities to successful managers. This allows firms to...

It is established that the standard principal-agent model cannot explain the structure of commonly used CEO compensation contracts if CRRA preferences...

We develop an optimal dynamic contracting theory of overpay for jobs in which moral hazard is a key concern, such as investment banking. Overpaying...

An important recent theoretical literature argues that the threat of exit can represent an effective form of governance when the blockholder is a...

We study a broad class of asset pricing models in which the stochastic discount factor (SDF) can be factorized into an observable component and a...

We analyze credit default swap settlement auctions theoretically and evaluate them empirically. In our theoretical analysis, we show that the current...

Mutual funds hold large blocks of shares in many major corporations. Practitioners and regulators alike have been concerned that mutual funds use...

This paper develops a dynamic model of financial institutions that borrow short-term and invest into long-term marketable assets. Because such...

We show that Treasury security prices in the secondary market decrease significantly before subsequent auctions and recover shortly after. This price...

Banks hold liquid and illiquid assets. An illiquid bank that receives a liquidity shock sells assets to liquid banks in exchange for cash. We...

We exploit a novel setting in which the same piece of information affects two sets of firms: one set of firms requires straightforward processing to...