There is a long normative ‘Social Contract’ tradition that attempts to characterize ex-post income inequalities that are agreeable to all ‘behind a veil of ignorance.’ This paper takes a similar normative approach to characterize social decision-making procedures. It is shown that quite generally some form of majority-voting is preferred to unanimity ‘behind a veil of ignorance’ whenever societ...

Article history: Received 24 November 2011 Received in revised form 9 August 2013 Accepted 13 August 2013 Available online 27 August 2013 I study firmswith past asbestos ties that suffer from significant increases in legal liabilities after a U.S. Supreme Court ruling in 1999. This event provides a natural experiment setting to estimate the indirect effects of financial distress on real activit...

We model the opacity of over-the-counter (OTC) markets in a setup where agents share risks, but have incentives to default and their financial positions are not mutually observable. We show that this setup results in excess “leverage” in that parties take on short OTC positions that lead to levels of default risk that are higher than Pareto-efficient ones. In particular, OTC markets feature a c...

A firm is sold in a cash auction in which cash-constrained bidders must raise external financing if they win the takeover contest. This paper shows that a bidder’s expected payoff after paying the seller and repaying his financier does not depend on the financier’s ability to extract rent. For any given security type, an increase in the cost of financing (e.g., a higher interest rate) is fully ...

We examine the empirical relationship between executive compensation and credit risk. For each of the three major components of CEO compensation – salary, bonus, and stock option awards – we derive estimates of “unexplained” compensation as pay that deviates substantially from expected pay based on firm size, past performance, and other variables. We then relate these measures of unexplained co...

Ferroelectrets have promoted a variety of exciting flexible sensors, actuators, and microenergy harvesters. However, most ferroelectrets been fabricated from non-degradable petro-based resins, thus the recycling these materials constitutes big challenge. This article reports biodegradable bioabsorbable ferroelectret films made polylactic acid (PLA) resins for highly sensitive transducer applica...

Insolvencies of life insurers in Europe have been virtually nonexistent. The deregulation of European markets, however, is likely to dramatically alter that situation. The goal of this study is two-fold: first, to identify significant variables in the early detection of financially distressed life insurers; and second, to consider the importance of these variables to the evaluation of life insu...

H35 hepatoma cells were treated with trypsin to abolish insulin binding and insulin-stimulated receptor kinase activity. Insulin was, however, internalized by fluid-phase endocytosis in trypsin-treated cells. Furthermore, nuclear accumulation of insulin was similar in control and trypsin-treated hepatoma cells. Northern blot analysis revealed insulin increased g33 and c-fos mRNA concentrations ...

Article history: Received 17 January 2014 Received in revised form 28 May 2014 Accepted 29 May 2014 Available online 12 June 2014 This article investigates the impact of the observation that managers can use cash to defer bankruptcy on default risk and corporate financial policies. I show that with managerial cash use to defer default, the impact of cash on default risk depends on two opposing ...

In many economies, small and medium-sized firms have no direct access to the financial markets but depend on bank loans. In the market for bank loans, competition is often distorted by state banks enjoying lower funding costs than private banks due to a state guarantee on their liabilities. In this paper, we argue that if the state bank’s guarantee is tied to an obligation to renegotiate loans ...