Insider trading may alleviate financing constraints by conveying value relevant information to the market (the information effect) or may exacerbate financing constraints by impairing market liquidity and distorting insiders' incentives to disclose value-relevant information (the confidence...

This paper presents a new theory on conglomeration. We show that conglomeration can serve as an effective mechanism in risk hedging. A conglomerate can be set up so that risks among some of its subsidiaries are negatively correlated. By such a design, the overall risk of the conglomerate is kept...

This paper provides a theory on staged or step-by-step privatization. We show that such an approach can be efficient, in the sense that it can successfully transform a state-owned enterprise into an efficient market-based firm by the time when the reform is complete. It may explain the...

Based on a large data set containing over 300,000 Chinese firms and detailed micro-level information, this paper conducts an empirical analysis of firms in distress. We focus on economic distress rather than financial distress; we study unlisted firms in an emerging market rather than listed...