We hypothesize that firms choose dividend increases to distribute relatively permanent cash-flow shocks and repurchases to distribute more transient shocks. As predicted, we find that post-shock cash flows of dividend increasing firms exhibit less reversion to pre-shock levels compared with repurchasing firms. We also examine whether the stock market uses the announcement of the payout method to update its beliefs about the permanence of cash-flow shocks. Controlling for payout size and the market's expectation about the permanence of the cash-flow shock, the stock price reaction to dividend increases is more positive than the reaction to repurchases.

This article reports the results of a comprehensive meta-analysis of turnover antecedents, extending an earlier one by Hom and Griffeth (1995). As such, this updated meta-analysis represents the most wide-ranging quantitative review to date of the predictive strength of numerous turnover antecedents. Importantly, the present investigation identifies various moderators of antecedent-turnover correlations. The implications of these findings for both theory and practice are discussed.

When rational risk-averse agents must choose among and share monetary risks, it is known that efficient sharing is typically nonlinear, even with common beliefs. Wherever it is, the sharing rule may affect the choice, randomized choice may allow everyone to gain, and indeed a randomized choice between unacceptable risks may be acceptable. An important exception occurs if the agents' utility functions are all exponential, all logarithmic, or all the same power (HARA). Then choices should accord with a group utility function of the same form independent of the sharing rule, randomization never helps, and all efficient sharing rules are linear. This self-contained paper simplifies, refines, and completes earlier analyses, identifying all exceptions; they are the linear sharing rules that make the agents' utilities agree. Aside from HARA, this can only occur for precisely one linear sharing rule or, in periodic versions of HARA, countably many.

I document the shift of high-yield issuance from the public to the Rule 144A private placement market and exploit data on credit spreads to investigate whether investors regard disclosure in the two markets as comparable. The key implications of the inadequate-disclosure hypothesis are that investors require premiums on 144A securities and that such premiums are largest for first-time bond issuers and privately owned firms about whom less information is publicly available. I find that 144A premiums, though positive initially, have vanished over time, and I find no evidence of larger 144A premiums for first-time issuers or private firms. Investors do, however, require premiums of first-time issuers, and to a lesser extent of privately owned firms, regardless of whether securities are issued in the 144A or public market. These findings imply that sophisticated investors do not value the incremental information provided by securities registration, but do value ongoing disclosure.

Over the past decade several countries, including the US, have introduced or redesigned legislation that confers priority in bankruptcy upon all or some bank deposits. We argue that in the presence of contracting costs such rules can increase efficiency. We first show in a private information model that a borrower can reduce overall costs of finance by letting informationally heterogeneous lenders choose between junior and senior debt. In particular, we find that debt priorities reduce socially wasteful information gathering by investors. We then argue why, particularly in banking, legal standardization of debt priorities may be superior to bilateral private arrangements.

In this paper, I test the common assumption that Japanese firms strive to appropriate knowledge from the global scientific community while sharing little in return. I found no support for this conventional perspective in the flat panel display industry. U.S. firms shared no more knowledge with their global scientific community than Japanese firms. Similarly, Japanese firms appropriated no more knowledge from the global community than their U.S. counterparts.

Over the past decade several countries, including the US, have introduced or redesigned legislation that confers priority in bankruptcy upon all or some bank deposits. We argue that in the presence of contracting costs such rules can increase efficiency. We first show in a private information model that a borrower can reduce overall costs of finance by letting informationally heterogeneous lenders choose between junior and senior debt. In particular, we find that debt priorities reduce socially wasteful information gathering by investors. We then argue why, particularly in banking, legal standardization of debt priorities may be superior to bilateral private arrangements.

Researchers examining loosely coupled systems, knowledge management, and complementary practices in organizations have proposed, informally, that the complexity of a successful business strategy can deter imitation of the strategy. This paper explores this proposition rigorously. A simple model is developed that parametrizes the two aspects of strategic complexity: the number of elements in a strategy and the interactions among those elements. The model excludes conventional resource-based and game-theoretic barriers to imitation altogether. The model is used to show that complexity makes the search for an optimal strategy intractable in the technical sense of the word provided by the theory of NP-completeness. Consequently, would-be copycats must rely on search heuristics or on learning, not on algorithmic “solutions,” to match the performance of superior firms. However, complexity also undermines heuristics and learning. In the face of complexity, firms that follow simple hill-climbing heuristics are quickly snared on low “local peaks,” and firms that try to learn and mimic a high performer's entire strategy suffer large penalties from small errors. The model helps to explain why some winning strategies remain unmatched even though they are open to public scrutiny; why certain bundles of organizational practices diffuse slowly even though they lead to superior performance; and why some strategies yield superior returns even after many of their critical ingredients are adopted by competitors. The analysis also suggests roles for management science and managerial choice in a world of complex strategies.