Publications

We propose that an active takeover market provides incentives by offering acquisition opportunities to successful managers. This allows firms to...

It is established that the standard principal-agent model cannot explain the structure of commonly used CEO compensation contracts if CRRA preferences...

We develop an optimal dynamic contracting theory of overpay for jobs in which moral hazard is a key concern, such as investment banking. Overpaying...

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

We study a broad class of asset pricing models in which the stochastic discount factor (SDF) can be factorized into an observable component and a...

Open letter by the international Euro-nomics academic group (www.euro-nomics.com), composed of Markus Brunnermeier, Luis Garicano, Philip R. Lane...

Busts after periods of prolonged prosperity have been found to be catastrophic. Financial institutions increase their leverage and shift their...

We analyze credit default swap settlement auctions theoretically and evaluate them empirically. In our theoretical analysis, we show that the current...

This paper develops a dynamic model of financial institutions that borrow short-term and invest into long-term marketable assets. Because such...

Mutual funds hold large blocks of shares in many major corporations. Practitioners and regulators alike have been concerned that mutual funds use...

We show that Treasury security prices in the secondary market decrease significantly before subsequent auctions and recover shortly after. This price...

Banks hold liquid and illiquid assets. An illiquid bank that receives a liquidity shock sells assets to liquid banks in exchange for cash. We...

We exploit a novel setting in which the same piece of information affects two sets of firms: one set of firms requires straightforward processing to...

In the short-run, bond risk premia exhibit pronounced spikes around major economic and financial crises. In contrast, long-term bond risk premia...