Investment Banks invest in Ramp;D to design innovative securities even when imitation is possible, i.e., when innovations cannot be patented. We show how a financial institution can profit from the development of financial products even if they are unpatentable. For certain types of financial...

Investment banks develop their own innovative derivatives to underwrite corporate issues but they cannot preclude other banks from imitating them. However, during the process of underwriting an innovator can learn more than its imitators about the potential clients. Moving first puts him ahead...

Investment banks imitate other bank's innovative corporate securities and compete with the innovator to underwrite new issues. This article uses data of all the corporate offerings of equity-linked and derivative securities in the Securities Data Company (SDC) to estimate the issuer's demand of...

This paper uses the NBER Patents and Citations Data merged with COMPUSTAT to identify and measure the dependency of innovation success on cash holdings in a patent race environment where firms race to innovate first and their innovation efforts are correlated. A firm's cash holdings increase its...

Investment banks develop new securities permanently even when their competitors can imitate them almost immediately and at significantly smaller development costs. Using data of all the new issues of Equity Linked and Derivative Securities since 1985 compiled by SDC, and firm financial data from...

Investment banks imitate other bank's innovative corporate securities with their own varieties, and compete with the innovator to underwrite new issues. This paper uses data of all the corporate offerings of Equity-Linked and Derivative Securities from the SDC records to estimate the issuer's...

This paper measures the gains accrued to financing firms as new corporate products are created. Innovations in corporate products increase the choice set and make the underwriting market more competitive. The resulting gains are measured using estimates of a structural model of the choice...

We model an investor's choice between filing Schedules 13D and 13G and use the model to estimate expected returns to activist and passive investing. Using the model, we decompose average Schedule 13D filing announcement returns into treatment (75.2%), stock picking (12.2%), and sample selection...

We develop a search model of block trades that values the illiquidity of controlling stakes. The model considers several dimensions of illiquidity. First, following a liquidity shock, the controlling blockholder is forced to sell, possibly to a less efficient acquirer. Second, this sale may...

We use the 2007 asset-backed commercial paper (ABCP) crisis as a laboratory to study the determinants of debt runs. Our model features dilution risk: maturing short-term lenders demand higher yields in compensation for being diluted by future lenders, making runs more likely. The model explains...