This article studies the potential links between the value of collateral and the investment decisions made by firms. We show that the use of collateral is an endogenous response to the presence of asymmetric information in financial markets. We then show that permanent shocks to the value of...

This article characterizes equilibrium financial contracts in a two-period model with adverse selection. We consider the case in which private information of the entrepreneur about the profitability of his project is perfectly corraleted across periods. We show that, in a dynamic context,...

This paper studies the impact of financial market structure on investment decisions by firms using company panel data from six countries: Germany and Japan, where borrower-lender relationships are more of a long-term nature, Canada, France, United Kingdom, and United States, where financial...

This paper reviews in a non-technical presentation some of the theoretical foundations of the Porter Hypothesis that argues that strict environmental regulations may increase the profits of industries that have to respect them. After a short presentation of the hypothesis, some of the arguments...