This paper investigates how firms bidding behavior in various auctions is affected by capital structure. A theoretical model is developed where the first price sealed bid and the English auction are examined. We find as debt levels increase, firms tend to decrease their bids. The lower bids give...

This paper investigates how firm bidding behavior in various auctions is affected by capital structure. A theoretical model is developed where the first price sealed bid and second price sealed bid auctions are examined in situations where the firms are competing for an asset with either a...

This paper investigates the design of privatization mechanisms in emerging market economies. We identify an emerging market economy by the political constraints that limit the set of viable privatization mechanisms. Our objective is to explain the striking diversity of privatization mechanisms...

This paper investigates the design of privatization mechanisms in emerging marketeconomies characterized by political constraints that limit the set of viable privatization mechanisms. Our objective is to explain the striking diversity of privatization mechanisms observed in practice and the...

Using data from the Wisconsin Entrepreneurial Climate Study, we study the sources of firms' finance during the very early stages of their lives. Our focus is the evolution of the mix of financial capital from 'insiders' and 'outsiders' as firms age. We find that at the beginning of firms' life...

This paper investigates the distribution of equity ownership between entrenched corporate insiders and dispersed outsiders when management has the ability to divert or manipulate the cash flows and when it is costly for equity holders to verify or prove any managerial wrongdoing for a third...

This paper develops a theory of mergers and divestitures wherein the motivation for mergers stems from the inability to finance marginally profitable, possibly short-horizon projects as stand-alone entities due to agency problems between managers and potential claimholders. A conglomerate merger...

We test several hypotheses on how takeover premium is related to investors’ divergence of opinion on the target’s equity value. We show that the total takeover premium, the pre-announcement target stock price runup and the post-announcement stock price markup are all higher when investors...

This paper shows that illiquid growth opportunities crucially impact the agency costs of risky debt. If the value of these growth opportunities is sufficiently high, they reverse riskshifting incentives into risk-avoidance incentives, creating a new agency cost of debt. They can also eliminate...

This paper shows that illiquid growth opportunities crucially impact the agency costs of risky debt. If the value of these growth opportunities is sufficiently high, they reverse risk shifting incentives into risk-avoidance incentives, creating a new agency cost of debt. They can also eliminate...