The paper studies an incentive contract in a monopolistic and duopolistic credit market where borrowers are dierent in risk. One lender is in an advantaged position with respect to the other due to past relations with the borrowers. The features of the equilibrium contract are investigated. It...

The revelation principle asserts that every outcome brought by a mechanism is realized by a truthful direct mechanism. The present paper investigates the regularity conditions of these two mechanisms in the continuous space of the agent’s type. It questions what regularity condition a general...

The level of the IPO spread taken by the underwriter is a controversial issue.Some claim that the level is too high and attributes it to collusion between investment banks while others contend to the contrary. The paper examines the spread in the framework of conflicts of interests between the...

This paper examines the impact of firms’ risk on executives’ decisions to exercise their executive stock options (ESOs). As the proportion of executives’ remuneration linked to the value of their firm (and therefore shareholder wealth) has increased, so the extent to which these executives...

“Multiple avenues of intermediation” (Greenspan 2000) suggest substitutability of corporate loan and bond finance which smooths external financing flows. Holmstrom and Tirole (1997) stress complementarity; for most firms bank finance and consequent monitoring is essential for bond finance....

This paper analyzes the 2002 Argentine crisis using the Jeanne and Masson (2000) model with sunspots. Testing this model empirically through a Markov-switching model suggests that self-sulfilling prophecies is a reasonable explanation for the devaluation of the peso.

Considerable attention has been directed in the recent finance and economics literature to issues concerning the effects on company failure risk of changes in the macroeconomic environment. This paper examines the accounting ratio-based and macroeconomic determinants of insolvency exit of UK...

Given the intrinsically sequential nature of child birth, timing of a child’s birth has consequences not only for itself, but also for the older and younger siblings. The paper thus argues that prior and posterior spacing between consecutive siblings are important measures of the intensity of...