When a series of individuals with private information announce public predictions, initial conformity can create an "information cascade" in which later predictions match the early announcements. This paper reports an experiment in which private signals are draws from an unobserved urn. Subjects make predictions in sequence and are paid if they correctly guess which of two urns was used for the draws. If initial decisions coincide, then it is rational for subsequent decision makers to follow the established pattern, regardless of their private information. Rational cascades formed in most periods in which such an imbalance occurred. In many economic situations, agents observe private signals of some underlying state and make public decisions. Subsequent decision makers face a dilemma if their own private signal is indicative of a state that is unlikely given the previously observed decisions. An "information cascade" occurs when initial decisions coincide in a way that it is optimal for each of the subsequent individuals to ignore their private signals and follow the established pattern. For example, suppose that a worker is not hired by several potential employers because of poor interview performances. Knowing this, an employer approached subsequently may not hire the worker even if the employer's own assessment is favorable, since this information may be dominated by the unfavorable signals inferred from previous rejections.

I. FOUNDATIONS. 1. Introduction and Overview. 2. The Financial Environment: Concepts and Principles. 3. Accounting, Cash Flows, and Taxes. II. VALUE AND CAPITAL BUDGETING. 4. The Time Value of Money. 5. Valuing Bonds and Stocks. 6. Business Investment Rules. 7. Capital Budgeting Cash Flows. 8. Capital Budgeting in Practice. III. RISK AND RETURN. 9. Risk and Return: Stocks. 10. Risk and Return: Asset Pricing Models. 11. Risk, Return, and Capital Budgeting. 12. Risk, Return, and Contingent Outcomes. 13. Risk, Return, and Agency Theory. IV. CAPITAL STRUCTURE AND DIVIDEND POLICY. 14. Capital Market Efficiency: Explanation & Implications. 15. Capital Structure Policy. 16. Managing Capital Structure. 17. Dividend Policy. V. LONG-TERM FINANCING. 18. Issuing Securities and the Role of Investment Banking. 19. Long-Term Debt. 20. Leasing and Other Asset-Based Financing. 21. Derivatives and Hedging. VI. WORKING CAPITAL MANAGEMENT. 22. Cash and Working Capital Management. 23. Accounts Receivable and Inventory. 24. Financial Planning. VII. SPECIAL TOPICS. 25. Mergers and Acquisitions. 26. Financial Distress. 27. International Corporate Finance.

This article examines incentives for adopting antitakeover charter amendments (ATAs) that are associated with compensation contracts. The evidence is consistent with the hypothesis that antitakeover measures such as ATAs help managers protect above‐market levels of compensation. Chief executive officers (CEOs) of firms that adopt ATAs receive higher salaries and more valuable option grants than CEOs at similar firms that do not adopt them. Furthermore, the magnitude of this difference increases following ATA adoption. The evidence is inconsistent with the hypothesis that ATAs facilitate the writing of efficient compensation contracts.

This article examines incentives for adopting antitakeover charter amendments (ATAs) that are associated with compensation contracts. The evidence is consistent with the hypothesis that antitakeover measures such as ATAs help managers protect above-market levels of compensation. Chief executive officers (CEOs) of firms that adopt ATAs receive higher salaries and more valuable option grants than CEOs at similar firms that do not adopt them. Furthermore, the magnitude of this difference increases following ATA adoption. The evidence is inconsistent with the hypothesis that ATAs facilitate the writing of efficient compensation contracts.

This paper reports the first experiments designed to explore the behavior of economies with prominent features of international finance. Two “countries,” each with its own currency, were created. International trade could take place only through the operation of markets for currency. The law of one price and the flow of funds theory of exchange rate determination were used to produce general equilibrium models that captured much of the behavior of the economies. Prices of goods, as well as the exchange rate, evolve over time toward the predictions of the models. However, both the law of one price and purchasing power parity can be rejected for reasons that do not appear in the literature. Patterns of international trade were as predicted by the law of comparative advantage.

The thesis of this symposium, organized by James Bicksler, was that while finance theory will surely inform practitioners, it seems appropriate to pay some attention to the opposite flow: practitioners can inform theory. Contributors include a distinguished group of practitioners with extensive backgrounds in economics, and economists with extensive public policy experience: Martin Feldstein, Robert Glauber, David Mullins, and Steven Wallman. Their topics range from privatizing social security, to managing market crashes, to the regulatory agency cost problem, to regulatory constraints in a technologically advanced world.

The thesis of this symposium, organized by James Bicksler, was that while finance theory will surely inform practitioners, it seems appropriate to pay some attention to the opposite flow: practitioners can inform theory. Contributors include a distinguished group of practitioners with extensive backgrounds in economics, and economists with extensive public policy experience: Martin Feldstein, Robert Glauber, David Mullins, and Steven Wallman. Their topics range from privatizing social security, to managing market crashes, to the regulatory agency cost problem, to regulatory constraints in a technologically advanced world.