Directors' and officers' (D&O) legal liability insurance is commonly provided to corporate executives and directors. Prior literature suggests managers are more willing to engage in opportunistic behaviors when their personal assets are more protected from litigation risk. Therefore, information...

Directors' and Officers' (D&O) legal liability insurance is a common component of CEO compensation packages. We expect managers are more willing to engage in opportunistic behaviors when their personal assets are protected from litigation risk. Therefore, information about D&O policy details is...

We describe a new type of bank liability, reverse convertible bonds, that help prevent bank runs that lead to bank failures (ex-post), and inefficient risk-taking (ex-ante). These bonds are short-term debt that automatically convert into equity following a missed debt repayment. They can be...

The price of any asset can be expressed with risk neutral probabilities, which are adjusted to incorporate risk preferences. This paper introduces the concepts of downside (respectively outer) risk neutral probabilities, which are adjusted to incorporate the preferences for downside (resp....

We show that there exists a probability measure under which the CAPM formula for expected returns holds for general utility functions and probability distributions. This probability measure, the ``downside risk neutral'' measure, is adjusted to incorporate the effects of downside risk and higher...