I examine the role of debt-financed special payments to shareholders in defending incumbent managements during proxy contests. This role is based on shareholder preference for dividends and the consequent linkage between dividends and managerial security. The model is used to explain why the seemingly contradictory phenomena of (i) wealth losses to shareholders and (ii) lack of any substantial ...

This paper introduces a noncausal autoregressive process with Cauchy errors in application to the exchange rates of the Bitcoin electronic currency against the US Dollar. The dynamics of the daily Bitcoin/USD exchange rate series displays episodes of local trends, which can be modelled and interpreted as speculative bubbles. The bubbles may result from the speculative component in the on-line t...

The growth of the private equity industry has spurred concerns about its impact on the economy. This analysis looks across nations and industries to assess the impact of private equity on industry performance. We find that industries where private equity funds invest grow more quickly in terms of total production and employment, and appear less exposed to aggregate shocks. We perform a number o...

Trading frictions in financial markets affect more long-term than short-term bonds, generating an upward-sloping yield curve. Long-term financing is expensive economies with higher trading so firms choose to borrow and invest shorter horizons lower productivity projects. The theory guides a new identification of the slope liquidity spread data. We measure calibrate model for United States, coun...

We study how to design an optimal government loan program for risky R&D projects with positive externalities. With adverse selection, the contract involves a high interest rate but nearly zero cofinancing by entrepreneur. This contrasts sharply observed schemes. selection and moral hazard, allowing two levels of effort entrepreneur, policy consists menu at most contracts, one self-financing...

ABSTRACT We study the optimal information system in a debt contracting setting which managers can engage value destroying risk-shifting behavior. The issues early-warning signals that allow lenders to take corrective actions such as liquidating unprofitable projects. When are empire builders, exhibits conservative bias leads excessive and project liquidations relative first best. In contrast, w...

Prior research shows that corporate innovation enhances firm value. Using a novel text-based measure of innovation, we explore how the effects on performance change in presence economic policy uncertainty. We use large sample US firms over period 1996 to 2010 test relationship by executing firm-fixed effect regressions. Our results show significantly positively affects performance. However, our...

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