In traditional portfolio theory, risk management is limited to the choice of the relative weights of the riskless asset and a diversified basket of risky securities, respectively. Yet in industry, risk management represents a central aspect of asset management, with distinct responsibilities and...

This paper shows that long debt maturities eliminate equityholders' incentives to reduce leverage when the firm performs poorly. By contrast, short debt maturities commit equityholders to such leverage reductions. However, shorter debt maturities also lead to higher transactions costs when...

A well documented observation is that consumers (and also firms) use high implicit discount rates when deciding about energy conservation investments. This fact is almost universally labelled a 'market failure', which in turn has led many analysts (most famous Amory Lovins) to argue for either...

In traditional portfolio theory, risk management is limited to the choice of the relative weights of the riskless asset and a diversifed basket of risky securities, respectively. Yet in industry, risk management represents a central aspect of asset management, with distinct responsibilities and...

This paper presents different social preferences and their impact on investors' and firms' decisions within a unified framework. We categorize preferences into three types: deontological, non-consequentialist, and consequentialist. When investors are large, all three preferences influence...