This paper studies how managerial compensation is shaped by the risk preference of shareholders. Firms with a large ownership held by "dual holders'' -- institutional investors that simultaneously hold equity and bonds of the company -- choose a less risk-inducing compensation structure....

This paper explores the impact of capital adequacy requirements on the investment behavior of insurance companies from a new perspective. We specifically investigate one important feature of Risk-Based Capital (RBC) system, the square root rule in aggregating risk categories. We show that the...

A number of studies have shown that liquidity constraints on households enhance the efficacy of fiscal and monetary policies. However, liquidity constraints are always accompanied by saving constraints, with potential opposite effects on fiscal and monetary efficacy. Research differentiating...