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 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 propose that the presence of short-term investors, such as short sellers, does not necessarily enhance short-termism. On the contrary, based on a sample of 11,969 firms across 33 countries over the 2003-2009 period, we observe that the threat of short selling increases long-term (i.e., R&D)...

We propose that the presence of short-term investors, such as short sellers, does not necessarily enhance short-termism. On the contrary, based on a sample of 11,969 firms across 33 countries over the 2003-2009 period, we observe that the threat of short selling increases long-term (i.e., R&D)...

We study how secular culture affects firm behavior when formal institutions fall short. We find that firms more exposed to alcohol-related sin culture exhibit more earnings management and lean their operations more toward local business partners. Tests using latitude and snow/temperature as...

We examine whether information manipulation by firms may reflect fundamental cooperation conventions induced by social norms in China. Consistent with this notion, we find that China’s leading social norms related to alcohol consumption and social drinking enhance earnings manipulation. An...

We investigate the impact of the absence of short selling on the pricing of managerial skills in the mutual fund industry. In the presence of divergent opinions regarding managerial skills, fund managers can strategically use fees to attract only the most optimistic capital. The recognition of...

Departing from prior work that demonstrates the stickiness and stability of alliance networks resulting from embeddedness, we extend matching theory to study firms’ withdrawal from alliances. Viewing alliance withdrawal as a result of firms’ pursuit of more promising alternative partners –...

Bank panics attract scholarly interest because they reflect distrust of each bank that experiences a run as a result of diffusion of information whereby rumors about bank runs trigger additional runs elsewhere. However, the contagion of bank runs is highly selective for reasons that are...

Most studies of responses to change in competitive environments focus on competitor-specific adaptations. However, rivals are often acutely aware of one another, and this awareness should influence their competitive behavior. In this study, we focus on three market structures that affect...