This paper investigates the once and future role of listing fees. We consider the theory of listing fees and why such a pricing structure initially evolved. We show how capital market developments have changed the desirability, and even viability, of this pricing structure. We then analyze the economics of listing fees. While providing revenue to the exchange, listing fees impose large (opportunity) costs, and we analyze this trade-off, presenting evidence from the New York Stock Exchange. We also discuss what types of listing requirements make economics sense for exchanges (or perhaps regulators) to impose on companies. Finally we consider whether listing fees will continue to survive. Journal of Economic Literature Classification Numbers: G10, G18, K22, K23.

This study investigates if the use of derivatives by corporations is likely to affect their financing strategies. I find a strong positive relation between the minimum revenue guaranteed by hedging and investment expenditure. This result implies that hedging increases the likelihood that investments can be financed internally. I also find that firms tend to finance their investment expenditures externally rather than internally. If external capital is more costly than internal capital it would clearly be in a firm's interestto reduce its dependence on external capital. Consistent with this result, Ifind that the median firm that does not hedge finances 100% of its investment expenditures externally, while the median firm that hedges finances only 86% of investments externally.

Recent studies suggest the apparent delay in the stock‐price response to earnings announcements (i.e., post‐earnings announcement drift) is caused by investors who underestimate the autocorrelation of seasonally‐differenced earnings (persistence). I present results that suggest: (1) a firm’s future persistence is predictable on the basis of its past persistence; (2) the immediate stock‐price response to earnings is positively related to historical persistence; (3) post‐earnings‐announcement drift is independent of historical persistence; and (4) consistent with (2) and (3), the difference between a firm’s current observed persistence and that implied in stock prices is independent of its historical persistence. These results extend prior research by demonstrating that investors are aware not only that seasonally‐differenced earnings are autocorrelated, but that investors recognize firm‐specific differences in the magnitude of the autocorrelation.

Market discipline is an article of faith among financial economists, and the use of market discipline as a regulatory tool is gaining credibility. Effective market discipline involves two distinct components: security holders' ability to accurately assess the condition of a firm (monitoring) and their ability to cause subsequent managerial actions to reflect those assessments (influence). Substantial evidence supports the existence of market monitoring. However, the existing evidence about market influence involves relatively rare events such as management turnover. This paper seeks evidence that U.S. bank holding companies' security price changes reliably influence subsequent managerial actions. Although we identify some patterns consistent with beneficial market influences, our methodology does not provide strong evidence that stock or (especially) bond investors regularly influence managerial actions. Day-to-day market influence remains, for the moment, more a matter of faith than of empirical evidence.

Under the standard real options approach to investment under uncertainty, agents formulate optimal exercise strategies in isolation and ignore competitive interactions. However, in many real-world asset markets, exercise strategies cannot be determined separately, but must be formed as part of a strategic equilibrium. This article provides a tractable approach for deriving equilibrium investment strategies in a continuous-time Cournot–Nash framework. The impact of competition on exercise strategies is dramatic. For example, while standard real options models emphasize that a valuable “option to wait ” leads firms to invest only at large positive net present values, the impact of competition drastically erodes the value of the option to wait and leads to investment at very near the zero net present value threshold. The real options approach to analyzing investment under uncertainty has become part of the mainstream literature of financial economics. The real options approach to investment now typically comprises an entire chapter in corporate finance textbooks [see, e.g., Brealey and Myers (2000) and Van Horne (1998)]. Essentially the real options approach posits that the oppor-tunity to invest in a project is analogous to an American call option on the investment opportunity. Once that analogy is made, the vast and rigorous machinery of financial options theory is at the disposal of real investment analysis. The real options approach is well summarized in Dixit and Pindyck (1994) and Trigeorgis (1996).1 A feature that the vast majority of real options articles have in common is the lack of strategic interaction across option holders. Investment (exercise) strategies are formulated in isolation, without regard to the potential impact of other firms ’ exercise strategies. The standard starting point for such models is an exogenous process for underlying asset values (e.g., the stock price in