We argue that the recent corporate governance reform in the Netherlands provides a natural experiment to explore the impact of changes in corporate governance on financing policy. We find that, relative to a control sample of comparable firms outside the Netherlands, Dutch firms significantly...

Using the SEC’s 2016 Tick Size Pilot Program (TSPP) as a natural experiment, we investigate the effects of investors’ information acquisition on equity versus debt financing. We find a significant increase in firms’ preference for equity over debt issuance after the TSPP’s...

How does improvement in corporate governance impact firms' financing policies and investment behavior? Using a reform that improved shareholder oversight via mandatory audit committee, I document that improved corporate governance leads to lower net debt issuance, lower firm leverage, and higher...

This paper explores how a relational contract establishes a norm of reciprocity and how such a norm shapes the provision of informal incentives. Developing a model of a long-term employment relationship, I show that generous upfront wages that activate the norm of reciprocity are more important...

We explore how inherent preferences for reciprocity and repeated interaction interact in an optimal incentive system. Developing a theoretical model of a long-term employment relationship, we first show that reciprocal preferences are more important when an employee is close to retirement. At...

This paper explores the optimal provision of dynamic incentives for employees with reciprocal preferences. Building on the presumption that a relational contract can establish a norm of reciprocity, I show that generous upfront wages that activate an employee’s reciprocal preferences are more...

Leveraging the detailed project-level data on biotech startups and their IPO records, this paper studies how adverse selection in capital markets affects financing decisions of entrepreneurs and firm values. By structurally estimating a dynamic model that features strategic experimentation and...

We analyze a repeated principal-agent setting in which the principal cares about the agent's verifiable effort as well as an extra profit that can be generated only if the agent is talented. The agent is overconfident about his talent and updates beliefs using Bayes' rule. An exploitation...