Theoretical research in corporate finance is critical for our understanding of real-world phenomena, for interpreting empirical results, and for deriving policy implications. We discuss the benefits and limitations of research in corporate finance theory and link them to the nine articles in...

The integration of algorithmic trading and reinforcement learning, known as AI-powered trading, has significantly impacted capital markets. This study utilizes a model of imperfect competition among informed speculators with asymmetric information to explore the implications of AI-powered...

Traditional theories argue that governance is strongest under a single large blockholder, as she has high incentives to undertake value-enhancing interventions. However, most firms are held by multiple small blockholders. This article shows that, while such a structure generates free-rider...

This thesis consists of three essays in financial economics. Chapter 1 is entitled "Inside Debt." Existing theories advocate the use of cash and equity in executive compensation. However, recent empirical studies have documented the prevalence of debt-like instruments such as pensions. This...

This paper reviews the theoretical and empirical literature on executive compensation. We start by presenting data on the level of CEO and other top executive pay over time and across firms, the changing composition of pay; and the strength of executive incentives. We compare pay in U.S. public...

We survey directors and investors on the objectives, constraints, and determinants of CEO pay. 67% of directors would sacrifice shareholder value to avoid controversy on CEO pay, implying they face significant constraints other than participation and incentive compatibility. These constraints...

This paper shows that the informativeness principle, as originally formulated by Holmstrom (1979), does not hold if the first-order approach is invalid. We introduce a "generalized informativeness principle" that takes into account non-local incentive constraints and holds generically, even...