This paper investigates the relationship between market conditions and the value and use of sourcing flexibility for service processes. We develop and analyze a series of models, and we derive expressions for the optimal switching decision, the value of the option to outsource, the value of the...

"We develop a theoretical model of illiquidity, in which illiquid assets are being traded by two agents -- buyers and sellers. Illiquidity is defined as the expected time it takes a seller to sell his asset at the optimal price. The theoretical model is developed in the context of transactions...

Operational risk incidences are likely to increase the degree of information asymmetry between firms and investors. We analyze operational risk disclosures by US financial firms during 1995–2009 and their impact on different measures of information asymmetry in the firms’ equity markets....

We examine the incidence of operational losses among U.S. financial institutions using publicly reported loss data from 1980 to 2005. We show that most operational losses can be traced to a breakdown of internal control, and that firms suffering from these losses tend to be younger and more...

We investigate the disclosures of material weaknesses in internal control mandated for Japanese firms under the 2006 Financial Instruments and Exchange Law. We find that the presence of a material weakness is more likely for firms that are younger, have better growth prospects, have a volatile...

This paper develops a theoretical model that explains how long-term consumption goals influence households' choice of real assets in situations when these assets have no investment value. Using a suburban residential housing market that exemplifies such a market, we develop a general equilibrium...