We explore the relationship between internal governance and the disciplining mechanisms created by the threat of short selling (i.e. “short-selling potential”). We argue that the presence of short selling increases the cost of agency problems for shareholders and incentivizes them to improve...

We study how the presence of short sellers affects the incentives of the insiders to trade on negative information. We show it induces insiders to sell more (shares from their existing stakes) and trade faster to preempt the potential competition from short sellers. An experiment and...

Firms in global markets often belong to business groups. We argue that this feature can have a profound influence on international asset pricing. In bad times, business groups may strategically reallocate risk across affiliated firms to protect core “central firms.” This strategic behavior...

This paper introduces and critically analyzes an emerging form of global infrastructure development by China's infrastructure construction companies, known as "integrated investment, construction, and operation" (IICO). This model has been promoted by the Chinese infrastructure industry,...

Chinese companies have been seeking to climb up the value chain by becoming investors and operators of the infrastructure projects they are contracted to build. Despite their prominent market share in Africa as contractors, Chinese companies face a steep learning curve and have sought to work...

The mutual fund industry consists of heterogeneous managers and investors. Hence, traditional models of delegated portfolio management need to be extended to allow heterogeneity. We propose that this extension can be modeled as a dual matching-contracting problem of endogenously repeated trust...

We hypothesize that poor country-level governance, which makes public information less reliable, induces fund managers to increase their use of semi-public information. Utilizing data from international mutual funds and stocks over the 2000-2009 period, we find that semi-public...