Working Papers

CEO compensation is a highly controversial subject. While most company directors believe that CEO pay is not a problem, the majority of the American public believes that it is. The difficulties that boards face in justifying CEO pay levels in…

Compared to the predictions of complete market models, actual exchange rates are puzzlingly smooth and only weakly correlated with macro-economic fundamentals, suggesting that market incompleteness plays a key role in exchange rate dynamics.…

We construct a novel database containing the universe of financial advisers in the United States from 2005 to 2015, representing approximately 10% of employment of the finance and insurance sector. We provide the first large-scale study that…

In this paper we introduce a new computationally tractable framework for Ericson and Pakes (1995)- style dynamic oligopoly models that overcomes the computational complexity involved in computing Markov perfect equilibrium (MPE). First, we define…

I consider the monopolistic pricing of informational good. A buyer’s willingness to pay for information is from inferring the unknown payoffs of actions in decision-making. A monopolistic seller and the buyer each observes a private signal about…

We evaluate the effects of the 2009 Home Affordable Modification Program (HAMP) that provided intermediaries with sizeable financial incentives to renegotiate mortgages. HAMP increased intensity of renegotiations and prevented substantial number…

We study a Bayesian persuasion game in the context of real options. The Sender (firm) chooses signals to reveal to the Receiver (regulator) each period but has no long-term commitment power. The Receiver chooses when to exercise the option,…

This paper examines the approaches accounting researchers use to draw causal inferences using observational (or non-experimental) data. The vast majority of accounting research papers draw causal inferences notwithstanding the well-known…

In a large-scale field experiment, we demonstrate that advertising can serve as a signal that enhances consumers’ evaluations of advertised goods. We implement the experiment on a mobile search platform that provides listings and reviews for an…

What makes an asset a “safe asset”? We study a model where two countries each issue sovereign bonds to satisfy investors’ safe asset demands. The countries differ in the float of their bonds and their resources/fundamentals available to rollover…

We consider a problem where an uninformed principal makes a timing decision interacting with an informed but biased agent. Because time is irreversible, the direction of the bias crucially affects the agent’s ability to credibly communicate…

This paper explores the implications of asymmetric information and learning in banking. We hypothesize that banks acquire private information about borrower quality, not just when screening the initial loan, but while monitoring the loan’s…

U.S. government bonds are considered to be the world’s safe store of value, especially during periods of economic turmoil such as the events of 2008. But what makes U.S. government bonds “safe assets?” We highlight coordination among investors,…

A theory of money needs a proper place for financial intermediaries. Intermediaries create inside money and their ability to take risks determines the money multiplier. In downturns, intermediaries shrink their lending activity and fire-sell…

This paper conceptualizes HP’s history of becoming between 1939 and 2015 in terms of an integral process overview encompassing seven distinct epochs and associated corporate transformations, and discusses the differential contributions of…

This paper shows how the study of the integral process of HP’s becoming and the differential contributions of successive CEOs to that process can be combined to create an evolutionary framework of the role of strategic leadership in corporate…

A statistical theory of overconfidence is proposed and applied to the issue of occupational choice. Individuals who can choose whether to engage in an activity or not must estimate their performance. The estimates have error and that error has…

We show that analyst coverage proxies contain information about expected returns.  We decompose analyst coverage into abnormal and expected components using a simple characteristic-based model and show that firms with abnormally high analyst…

A Nordstrom customer in the mid 70s walked into the Fairbanks, Alaska store and asked to “return” two worn snow tires. An awkward moment! Nordstrom, which evolved from a shoe store to a department store, never sold tires (although another company…

Motivated by the recent opening of a public stool bank that enables fecal microbiota transplantation for the treatment of Clostridium difficile infection, we develop and optimize a mathematical model that tracks the flow of stools from donation…