This paper offers a novel explanation for why some firms prefer to pay dividends rather than repurchase shares. It is well-known that insitutional investors are relatively less taxed than individual investors, and that this induces "dividend clientele" effects. We argue that these clientele...

Our model assumes that creditors need to expend resources to collect on claims. Consequently, because diffuse creditors suffer from mutual free-riding (Holmstrom (1982)), they fare worse than concentrated creditors (e.g. a house bank). The model predicts that measures of debt concentration...

It is now well known that the Sharpe ratio and other related reward-to-risk measures may be manipulated with option-like strategies. In this paper we derive the general conditions for achieving the maximum expected Sharpe ratio. We derive static rules for achieving the maximum Sharpe ratio with...

This paper offers a novel explanation for why some firms prefer to pay dividends rather than repurchase shares. It is well-known that institutional investors are relatively less taxed than individual investors, and that this induces "dividend clientele" effects. We argue that these clientele...

This discussion piece argues that situations in which there are two similarly strong contestants (Symmetry) are often marked by long and expensive struggles for advantage and power. In contrast, an arrangement in which only one party gets access to all/most resources (Asymmetry) can minimize the...

This paper explains why seemingly irrational overconfident behavior can persist. Information aggregation is poor in groups in which most individuals herd. By ignoring the herd, the actions of overconfident individuals (“entrepreneursâ€) convey their private information. However,...