We perform an experiment in which subjects bid for participating in a vote. The setting precludes conflicts of interests or direct benefits from voting. The theoretical value of participating in the vote is therefore zero if subjects have only instrumental reasons to vote and form correct...

We perform an experiment where subjects bid for the right to participate in a vote and where the theoretical value of the voting right is zero if subjects are fully rational. We find that experimental subjects are willing to pay for the right to vote and that they do so for instrumental reasons....

We investigate biases of valuation methods and document that these depend largely on the choice of error measure (percentage vs. logarithmic errors) used to compare valuation procedures. We analyze four multiple valuation methods (averaging with the arithmetic mean, harmonic mean, median, and...

"This paper studies how the use of alternative valuation methodologies affects investment performance for a sample of 53 German venture capitalists. We measure investment performance by the amount of investments they need to write off and by the number of companies they take public. We find that...

In the period 1997-2004, Preussag, a diversified German conglomerate of old economy businesses, changed itself into TUI, a company focused almost entirely on tourism and logistics. This paper analyzes how this strategy was executed and how it contributed to Preussag’s underperformance of the...

We calibrate the standard principal-agent model with constant relative risk aversion and lognormal stock prices to a sample of 598 U.S. CEOs. We show that this model predicts that most CEOs should not hold any stock options. Instead, CEOs should have lower base salaries and receive additional...

In this paper we analyze the impact of banks on German non-financial companies through ownership stakes and board representation. We find that the correlation between firm value and bank representation is negative and highly significant. By exploring the time series dimension of our dataset, we...

This paper analyzes optimal executive compensation contracts when managers are loss averse. We establish the general optimal contract analytically and parameterize the model using data on compensation contracts for 595 CEOs. Parameters for preferences are based on the experimental literature....

We estimate a standard principal agent model with constant relative risk aversion and lognormal stock prices for a sample of 598 US CEOs. The model is widely used in the compensation literature, but it predicts that almost all of the CEOs in our sample should hold no stock options. Instead, CEOs...