We develop an economic analysis in order to examine the effects of consumer, regulatory, and competitive pressure on firm investments in environmentally friendly production. Specifically, we ask: Why do firms vary in their levels of environmental innovation? Under what conditions are such...

We develop an economic analysis in order to examine the effects of consumer, regulatory, and competitive pressure on firm investments in environmentally friendly production. Specifically, we ask: Why do firms vary in their levels of environmental innovation? Under what conditions are such...

We examine the combined effects of managerial overconfidence, asymmetric information and moral hazard problems on the manager's choice of financing (debt or equity). We demonstrate the following; a) in the asymmetric information model, overconfidence is unambiguously bad. It induces excessive...

We develop a model of Bertrand competition in differentiated products, in order to examine the relationship between product market competition and financial leverage. Leverage softens price competition by inducing firms to discount the future more heavily. We consider potential intensity and...

We analyse bargaining between a venture capitalist and a manager over their financial contract. We consider three main questions. What is the effect of bargaining, and when will it provide the first-best solution? What is the effect of bidding between competitive venture capitalists to supply...

Behavioural Corporate Finance (BCF) examines the effects of managerial and investor psychological biases on a firm's corporate finance decisions (such as investment appraisal and capital structure). In contrast to the well-developed research in behavioural finance (which examines the effects of...

We consider the effect of auditor tenure on the level of managerial fraud and the extent of auditor qualification of reports. We consider two conflicting effects. As auditor tenure increases, the auditor's ability to detect fraud increases, which reduces the manager's fraud incentives. On the...

I analyze manager and venture capitalist bargaining over the financial contract in the face of double-sided moral hazard problems. The allocation of cash flows depends on the combined effects of value-adding services, reputation seeking, and bargaining power. Welfare is maximized when the...

A popular misconception among practitioners and academics is that repurchasing shares can increase the share price, since total earnings and market capitalization are spread over a smaller number of shares outstanding. I present a numerical example that demonstrates the fallacy of this view. I...