Publications

We explore a new mechanism through which investors take correlated shortcuts. Specifically, we exploit a regulatory provision governing firm...

The conventional view of market timing suggests an unambiguous, negative relation between equity misvaluation and the equity share in new issues—that...

The best way to resolve global financial instability is for the owners of capital to assert themselves, with sovereign funds well positioned to take...

Review of Financial Studies, 25 (12). pp. 3457-3489. 

Short-term price movements have come to dominate.

In this paper we survey the theoretical and empirical literature on market liquidity. We organize both literatures around three basic questions: (a)...

We analyze how asymmetric information and imperfect competition affect liquidity and asset prices. Our model has three periods: agents are identical...

We study dynamic general equilibrium in one-tree and two-trees Lucas economies with one consumption good and two CRRA investors with heterogeneous...

We propose a new theory of suboptimal risk-taking based on contractual externalities. We examine an industry with a continuum of firms. Each firm’s...

Most of us have been brought up to believe that free markets combined with healthy competition deliver good outcomes. We also presume that what holds...

Review of Financial Studies, 25 (6). pp. 1845-1896. 

Journal of Financial Economics, 104 (2). pp. 383-400.

Review of Financial Studies, 25 (5). pp. 1339-1365.

HFT has its benefits but also poses potential systemic risks. Bruno Biais and Paul Woolley discuss the need for deft regulation.

According to classical economics, there are no gains to be made in an efficient market. Yet markets are often far from efficient and the gains are...

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