We allow the preference of a political majority to determine both the corporate governance structure and the division of profits between human and financial capital. In a democratic society where financial wealth is concentrated, a political majority may prefer to restrain governance by...

We develop a model of endogenous lobby formation in which wealth inequality and political accountability undermine entry and financial development. Incumbents seek a low level of effective investor protection to prevent potential entrants from raising capital. They succeed because they can...

This paper offers a classification of credit markets in transition economies. It describes a continuum of systems by identifying its polar cases: countries where the entire financial system still relies on outside money, mostly republics of the former Soviet Union; and those where a more...

We provide a strategic rationale for growth options under uncertainty and imperfect competition. In a market with strategic competition, investment confers a greater capability to take advantage of future growth opportunities. This strategic advantage leads to the capture of a greater share of...

The paper develops a simple theoretical framework of financial discipline during the stabilization of a transition economy, from which it derives an empirical measure to assess whether the banking sector has started to act as a source of financial discipline, or just as a temporary buffer for...

The rapid internationalization of capital markets in recent times has manifested itself in mobility of equity investment as well as in a growing number of foreign cross-listings. We study a fairly complete sample of all Dutch foreign crosslistings since 1973. By measuring the stock market...

This paper investigates the argument that privatization share pricing reflects a heightened political risk sensitivity, following Perotti (1995). We do by examining the relative performance in the short and medium term of privatization stocks in emerging markets. Our goal is to determine whether...

This paper studies the incentives for transparency under different forms of corporate governance in a context of product market competition. This paper endogenizes the governance and financial structure of firms and determines a strategic decision on the degree of transparency in a context of...

We investigate the valuation of platform investment, such as a software operating system or an Internet portal WebPage. Platform investment is the creation of an innovative distribution and production infrastructure, which increases access to customers; as a result it reduces entry costs in...

The paper analyzes foreign investment and asset prices in a context of uncertainty over future government policy. The model endogenizes the process of learning by foreign investors facing a potentially opportunistic government, which chooses strategically the timing of a policy reversal in order...