We address explicitly the issue of risk in the theory of the firm. To that end, we present a model in which the shareholders’ portfolio selection of assets and the decisions of the firm are jointly determined through the market process. The model allows to study the role of markets and prices on the type of risky activities undertaken by a firm and the allocation of random profit among sharehol...

Recent evidence on financial structures within firms suggests that concentrated ownership in the form of several large shareholders, rather than dispersed ownership, is the norm. This is puzzling given that often the stakes are too big for optimal diversification and too small to guarantee control. This paper attempts to provide an explanation. We consider a setting where multiple shareholders ...

Do large shareholders monitor firms on behalf of minority shareholders, or share control with other insiders to maximize the gains of the controlling group? We show how firm characteristics and governance laws determine the role of large shareholders in corporate governance. If the value of investment opportunities are hard for insiders to evaluate, letting a large shareholder monitor a single ...

We consider a simple model of a firm acting strategically on behalf of its shareholders. The price normalization problem arising in general equilibrium models of imperfect competition is overcome by using the concept of real wealth maximization. This concept is based on shareholders’ aggregate demand and does not involve any comparison of utility profiles that shareholders can possibly obtain. ...

We present a new verifiable secret redistribution protocol for threshold sharing schemes that forms a key component of a proposed archival storage system. Our protocol supports redistribution from (m,n) to (m,n) threshold sharing schemes without requiring reconstruction of the original data. The design is motivated by archive systems for which the added security of threshold sharing of data mus...

We examine the impact of firms’ pre-crisis pension underfunding on stock returns US firms during COVID-19 market crisis. Unlike prior studies, our study uses pandemic as an exogenous shock to and reports that shareholders remain indifferent underfunding. The remains trivial even after considering possible financial constraints, information asymmetry, mandatory contributions associated with Our ...

HOSE WHO WISH to determine why banks fail typically focus on the characteristics of banks and their local markets that make them vulnerable to losses.1 A key factor often overlooked, however, is capital injections by shareholders. A bank whose losses exceed its capital need not fail, if its shareholders (existing or new) inject sufficient additional funds to restore its capital ratio to a level...

In the early 1930s, Julian Huxley, the prominent English evolutionary biologist, embarked on a visit across many British science laboratories to understand in which way the scientific knowledge they were producing was socially relevant. His account of this journey, published in 1934 (Huxley, 1934), is a compendium of applied scientific research in engineering, medicine, agriculture and so forth...