A Fast Literature Search Engine based on top-quality journals, by Dr. Mingze Gao.
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Results 536 resources
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Financial institutions around the world expected the millennium date change (Y2K) to cause an aggregate liquidity shortage. Responding to the concern, the Federal Reserve Bank of New York auctioned Y2K options to primary dealers. The options gave the dealers the right to borrow from the Fed at a predetermined interest rate. Using the implied volatilities of Y2K options and the on/off-the-run spread, we demonstrate that the Fed's action eased the fears of bond dealers, contributing to a drop in the liquidity premium of Treasury securities. Our analysis shows the link between the microstructure of government debt markets and the central bank's provision of liquidity. We argue that Y2K options and their effects on liquidity premium broadly conform to the economic theory on public provision of private liquidity.
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We analyze how the work ethic of managers impacts a firm's employment contracts, riskiness, growth potential, and organizational structure. Flat contracts are optimal for diligent managers because they reduce risk‐sharing costs, but they attract egoistic agents who shirk and unskilled agents who add no value. Stable, bureaucratic firms with low growth potential are more likely to gain value from managerial diligence. Firms that hire from a virtuous pool of agents are more conservative in their investments and have a horizontal corporate structure. Our theory also yields several testable implications that distinguish it from standard agency models.
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Using estate tax returns data, we observe that the share of women among thevery wealthy in the United States peaked in the late 1960s at nearly one-halfand then declined to one-third. We argue that this pattern reflects changes inthe importance of dynastic wealth, with the share of women proxying for inheritedwealth. If so, wealth mobility decreased until the 1970s and rose thereafter.Such an interpretation is consistent with technological change driving longtermtrends in mobility and inequality, as well as the recent divergence betweentop wealth and top income shares documented elsewhere. (JEL D31, J16, J62,O33)
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We show that female directors have a significant impact on board inputs and firm outcomes. In a sample of US firms, we find that female directors have better attendance records than male directors, male directors have fewer attendance problems the more gender-diverse the board is, and women are more likely to join monitoring committees. These results suggest that gender-diverse boards allocate more effort to monitoring. Accordingly, we find that chief executive officer turnover is more sensitive to stock performance and directors receive more equity-based compensation in firms with more gender-diverse boards. However, the average effect of gender diversity on firm performance is negative. This negative effect is driven by companies with fewer takeover defenses. Our results suggest that mandating gender quotas for directors can reduce firm value for well-governed firms.
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Recent empirical work suggests that a proxy for the probability of informed trading (PIN) is an important determinant of the cross-section of average returns. This paper examines whether PIN is priced because of information asymmetry or because of other liquidity effects that are unrelated to information asymmetry. Our starting point is a model that decomposes PIN into two components, one related to asymmetric information and one related to illiquidity. In a two-pass Fama-MacBeth [1973. Risk, return, and equilibrium: empirical tests. Journal of Political Economy 81, 607-636] regression, we show that the PIN component related to asymmetric information is not priced, while the PIN component related to illiquidity is priced. We conclude, therefore, that liquidity effects unrelated to information asymmetry explain the relation between PIN and the cross-section of expected returns.
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The average cash‐to‐assets ratio for U.S. industrial firms more than doubles from 1980 to 2006. A measure of the economic importance of this increase is that at the end of the sample period, the average firm can retire all debt obligations with its cash holdings. Cash ratios increase because firms' cash flows become riskier. In addition, firms change: They hold fewer inventories and receivables and are increasingly R&D intensive. While the precautionary motive for cash holdings plays an important role in explaining the increase in cash ratios, we find no consistent evidence that agency conflicts contribute to the increase.
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We compare the most common methods for selling a company or other assetwhen participation is costly: a simple simultaneous auction, and a sequentialprocess in which potential buyers decide in turn whether to enter the bidding.The sequential process is always more efficient. But preemptive bids transfersurplus from the seller to buyers. Because the auction is more conducive toentry – precisely because of its inefficiency – it usually generates higher expectedrevenue. We also discuss the effects of lock-ups, matching rights, break-up fees(as in takeover battles), entry subsidies, etc. (JEL D44, G34, L13)
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Journals
- American Economic Review (217)
- Journal of Finance (79)
- Journal of Financial Economics (93)
- Review of Financial Studies (147)
Topic
- Bond (26)
- CEO (14)
- Mergers and Acquisitions (9)
- Director (8)
- Capital Structure (4)
Resource type
- Journal Article (536)