This paper examines investment and financing policy in "fully revealing" equilibria - equilibria in which information asymmetries are resolved. Since all securities are priced correctly in a fully revealing equilibrium, it seems plausible that such equilibria would be free of the well known...

This paper presents an asymmetric information model of share repurchases when shareholders have heterogeneous reservation values. Consistent with empirical evidence, managers in the model repurchase shares at a premium above the post- repurchase share value - transferring wealth from...

We analyze capital allocation in a conglomerate where divisional managers with uncertain abilities compete for promotion to CEO. A manager can sometimes gain by unobservably adding variance to divisional performance. Capital rationing can limit this distortion, increase productive efficiency,...

The paper first examines the various concepts of exposure and relates t hem to existing theories of risk management. It then proceeds to investigate which methods are best suited to measure exposur e under various circumstances. The paper provides a detailed comparison of the pro forma,...

We document the effect on share value of a foreign firm listing on the New York, American Stock Exchanges or Nasdaq over-the-counter market. Our sample consists of over 160 firms from 14 countries that listed their shares for the first time in the US as ordinary listings or as American...

Prior studies indicate that the predictive power of implied forward rates for future spot rates is weak over long sample periods and typically varies dramatically across different subperiods. Fama (1976, 1984) conjectures that the low forecast power is due to a failure to control for the term...

Bankrupt firms should reorganize if the wealth created by continuing is expected to exceed the wealth that would be created by liquidating. We examine 89 firms that reorganized in Chapter 11 and find that, despite having sub-standard accounting profitability, nearly 80% created more wealth by...