Tournaments, reward structures based on rank order, are compared with individual contracts in a model with one risk-neutral principal and many risk-averse agents. Each agent's output is a stochastic function of his effort level plus an additive shock term that is common to all the agents. The principal observes only the output levels of the agents. It is shown that, in the absence of a common shock, using optimal independent contracts dominates using the optimal tournament. Conversely, if the distribution of the common shock is sufficiently diffuse, using the optimal tournament dominates using optimal independent contracts. Finally, it is shown that for a sufficiently large number of agents, a principal who cannot observe the common shock but uses the optimal tournament does as well as one who can observe the shock and uses independent contracts.

As the history of Keynesianism illustrates, the distinguishing features and exact claims associated with a particular economic policy doctrine are rarely clear in the early stages of its development. Supply-side economics is no different. Like Keynesianism it has received political applications before its content was settled. Thus, expository work remains to be done before supply-side economics is likely to attract the detailed attention and criticism that will ultimately define its place in the policy discussions of our discipline. To help place the new approach to economic policy, this paper selects some properties and conditions that could be consonant with major aspects of supply-side doctrine. In preparing this selection, we are quite indifferent to whether those from whose thoughts or models we pick are professed supply siders. Furthermore only two of several possible points of distinction are developed. The first theme we wish to elucidate is that supply siders insist, more than most economists, that policy should be conducted by rules relating not to procedure (stable money growth), but objectives (stable prices). Procedural rules (tax indexing) or constitutional restraints (balanced budget) may be resorted to as a second-best. Such positions may be advocated if the feedback control mechanisms involved in gearing economic policy instruments directly to final targets are prevented from functioning reliably in the existing political system. In general, however, supply-side economics presents itself as firm and principled on targets, but flexible on methods. The second point is that, to appreciate the elasticity optimism which brought supply-side economics to public attention in the first place, the short run should be extended to one generation and the long run to several generations. The overall impression we hope to convey is that even though supply-side economics has lacked a dominant intellect as challenging as Keynes was to Keynesians and non-Keynesians alike, it may have something beyond mere variations in emphasis to contribute to the concerns of economic policy.

Analysts ask managers for forward-looking information in one-third of quarterly conference calls; most frequently, seeking earnings per share guidance. In this study, we examine the long-term consequences of analysts' questions on future manager disclosure choices. Using six types of commonly provided guidance, we find that when analysts request new guidance or ask about prior guidance, managers are more likely to provide similar guidance in future quarters. When analysts do not ask about prior guidance, managers are less likely to provide that type of guidance in the future. This effect is long-lasting, spills over into earnings announcements, and is strongest for firms with the most severe information problems. Our results provide evidence that analysts shape managers' disclosure choices in meaningful ways.

We study how business press coverage can discipline credit rating agency actions. Because of their greater prominence and visibility to market participants, more widely covered firms can pose greater reputational costs for rating agencies. Consistent with rating agencies limiting such risk, we find that ratings for more widely covered firms are more timely and accurate, downgraded earlier and systematically lower in the year prior to default, and better predictors of default and non-default. We also find that the recent tightening of credit rating standards is largely explained by growing business press coverage of public debt issuers. Additionally, we find that credit rating agencies take explicit actions to improve their ratings by assigning better educated and more experienced analysts to widely covered firms. Moreover, we document that missed defaults of more visible firms create greater negative economic consequences for rating agencies, and that rating improvements following the financial crisis were greater for more visible firms. Data Availability: All data are publicly available from the sources identified in the text.

Using a dataset of 3,234 letters sent by 434 hedge funds to their investors during 1995–2011, we study what motivates hedge fund managers to make voluntary disclosures. Contrary to the hedge fund industry's reputation for opacity, we observe that managers provide their investors with an array of quantitative and qualitative information about fund returns, risk exposures, holdings, benchmarks, performance attribution, and future prospects. We find that the tensions between the agency costs faced by investors and the proprietary costs faced by managers affect fund disclosures. Consistent with managers reducing proprietary costs, better-performing funds disclose less quantitative data about performance and holdings, and consistent with the presence of agency costs, riskier funds disclose less quantitative information about performance and assets under management.