We consider the problem of motivating privately informed managers to engage in entrepreneurial activity to improve the quality of the firm's investment opportunities. The firm's investment and compensation policy must balance the manager's incentives to provide entrepreneurial effort and to...

This paper studies the relation between demographics and the equity premium in a dynamic overlapping generations (OLG) equilibrium model. Investors have both labor and investment income. The labor income and the dividend processes are correlated. Investors trade stocks for consumption purposes...

We develop a model of a two-division firm in which the “strong†division has,on average, higher quality investment projects than the “weak†division. We show that the firm optimally biases its project selection policy in favor of the weak division and this bias is stronger...

We consider a firm with two investment projects (divisions) each run by a manager who can provide (i) (unverifiable) information about the quality of either or both projects and (ii) (unverifiable) access to valuable resources that can enhance the cash flows of either or both projects. We then...

We examine the problem of motivating privately informed managers to engage in entrepreneurial activity to improve the quality of the firm's investment opportunities. The firm's investment and compensation policy must balance the manager's incentives to provide entrepreneurial effort and to...

This paper examines the mechanism through which the incorporation of information into prices leads to cross-autocorrelations in stock returns. The lead-lag relation between large and small stocks increases with lagged spreads of large stocks. Further, order flows in large stocks significantly...