We provide a real-options model of an industry in which agents time abandonment of their projects in an effort to protect their reputations. Agents delay abandonment attempting to signal their quality. When a public common shock forces abandonment of a small fraction of projects irrespective of...

This paper proposes an explanation for two empirical puzzles surrounding initial public offerings (IPOs). Firstly, it is well documented that IPO underpricing increases during quot;hot issuequot; periods. Secondly, venture capital (VC) backed IPOs are less underpriced than non venture capital...

This paper proposes an explanation for two empirical puzzles surrounding initial public offerings (IPOs). Firstly, it is well documented that IPO underpricing increases during hot issue periods. Secondly, venture capital (VC) backed IPOs are less underpriced than non venture capital backed IPOs...

We develop and test a simple asymmetric information model of CEO quality, in which CEOs know their quality and shareholders may only infer this from observations of corporate profits. CEOs signal their quality to shareholders by manipulating the time path of corporate profits. Though...

We investigate the interaction between supplier credit sales and customer advance payment. We find evidence that advance payments and credit sales are used as complementary terms of payment in international trade and in transactions of differentiated goods.

A game in which an incumbent and an entrant decide the timings of entries into a new market is investigated. The profit flows involve two uncertain factors: (1) the basic level of the demand of the market observed only by the incumbent and (2) the fluctuation of the profit flow described by a...

This paper investigates the robustness of post-earnings-announcement-drift (PEAD) on a price signal perspective, unlike the traditional literature that focuses on fundamental signal. The studied period is 2003-2015, for four main US indices. The results suggest that some economic agents are too...

This paper analyzes how convertible debt is used in a high-risk, emerging industry setting. We argue that there is a lifecycle component to the design and market impact of convertible debt securities. Contrary to prior cross-industry research findings, we show that convertible debt in the...

This paper exploits the 2003 mutual fund trading scandal to investigate firms’ seemingly myopic investment behavior following negative stock price shocks. Firms affected by the scandal are more likely to meet or marginally beat earnings targets by cutting research and development and other...

Dividend reductions have long been considered a "last resort" action for firm managers. Managerial reluctance to reduce dividends emanates from the view that dividend drops signal managerial pessimism regarding future earnings. Contrary to expectations, studies show that earnings rebound...