This paper studies incentives in a dynamic contracting framework of a levered firm. In particular, the manager selects long-term and short-term efforts, while shareholders choose initially optimal leverage and ex-post optimal default policies. There are three results. First, shareholders trade off the benefits of short-termism (current cash flows) against the benefits of higher growth from long...

Using a sample of 155 IPOs that delist due to performance-related reasons shortly after going public, this paper sheds light on the motives of entrepreneurs and early investors in taking their firm public. I empirically examine the actions of insiders over the entire public life of the IPO firm in order to understand whether they knowingly sell overvalued equity. I examine the behavior and the ...

Recent theoretical literature has debated the desirability of permitting debtors to contract with lenders over control rights in bankruptcy. Proponents point to the monitoring benefits brought from concentrating control rights in the hands of a single lender. Detractors point to the costs imposed on other creditors by a senior claimant’s inadequate incentives to maximise net recoveries. The UK ...

We model the spillovers from a distressed firm’s debt restructuring to its competitors and related firms. We demonstrate that there are two channels for these spillovers: a direct channel that transmits the effect of bankruptcy on the firm’s competitiveness, and an indirect channel that transmits information about the firm. When the indirect channel is dominant, a firm’s bankruptcy pushes up it...

East Asian economies caught in the recent crisis have seen their output contract fiercely despite enormous real exchange rate depreciation. Why are relative prices not maintaining demand and output at pre-crisis levels? We investigate the idea that there are negative supply-side shifts due to balance sheet effects. Specifically, we use the framework of Kiyotaki and Moore (1997) to explore the i...

The Japanese economy experienced prolonged recessions during the 1990s. Previous studies suggest that evergreen lending to troubled firms known as “zombie firms” distorted market discipline in terms of stabilizing the Japanese economy and caused significant delays in the economy’s recovery. However, the eventual bankruptcy of zombies was rare. In fact, a majority of the “zombie” firms substanti...

We examine the association between a firm’s ex ante risk of financial distress and the compensation and incentives provided to newly hired CEOs. Our findings are as follows. First, new CEOs at firms with higher bankruptcy risk receive substantially less compensation than new CEOs at low-risk firms. Second, while pay-performance sensitivity is higher for new CEOs at high-risk firms, the semi-ela...

The aggregation of amyloid-β peptides is associated with the pathogenesis of Alzheimer's disease, in which the 30-36 fragments play an important part as a fiber-forming hydrophobic region. The fibrillar structure of Aβ30-36 has been detected by means of X-ray diffraction, but its oligomeric structural determination, biophysical characterization, and pathological mechanism remain elusive. In thi...

We study how interactions between financing and investment decisions can shape firm boundaries in dynamic product markets. In particular, we model a new product market opportunity as a growth option and ask whether it is best exploited by a large incumbent firm (Integration) or by a separate, specialized firm (Non-Integration). Starting from a standard theoretical framework, in which value-maxi...

We find all the inequivalent simple root systems for the complex reflection groups G12, G24, G25 and G26. Then we give all the non-congruent essential presentations of these groups by generators and relations. The methed used in the paper is applicable to any finite (complex) reflection groups. Introduction. Shephard and Todd classified all the finite complex reflection groups in paper [5]. Lat...