Publications

Due to reusability of program code and learning effects in software development, development cost of custom software typically decreases in time and experience. This creates a first-mover advantage to software developers. The paper studies…

This article explores the information effect of financial risk management. Financial hedging improves the informativeness of corporate earnings as a signal of management ability and project quality by eliminating extraneous noise.…

We investigate fair value accounting critics’ assertions by restating earnings and regulatory capital to reflect banks’ disclosed investment securities fair values. We find: (1) Fair value-based earnings are more volatile than historical cost…

This paper derives a statistical discrimination model that includes the self selection that results when employees optimally choose which jobs to apply for. We show that in such a model important theoretical results in the statistical…

This paper confirms a version of a conjecture by Fischer Black regarding consol rate models for the term structure of interest rates. A consol rate model is one in which the stochastic behavior of the short rate is influenced by the consol rate.…

This paper takes a skeptical view of the theory that the slight decline in young women’s labor-force participation from 1985 to 1990 can be explained by the fact that there are fewer women now in their early twenties than there are men in their…

 This paper documents a positive association between firms’ tendencies to access capital markets and to disclose earnings forecasts, suggesting that firms attempt to mitigate potential consequences of differential information through…

The literature on networks suggests that the value of a network is positively affected by the number of geographically dispersed locations it serves (the “network effect”) and the number of its users (the “production scale effect”). We show that…

This paper examines the entry decisions of generic pharmaceutical manufacturers into markets opened by patent expiration. In particular, I examine the role of pre-expiration brand advertising to see if it deters generic entry. Other drug…

When commercial banks make loans to firms and also underwrite securities, does this hamper or enhance their role as certifiers of firm value? ¶his paper examines empirically the pricing of bank-underwritten securities as compared to investment-…

The theories of supermodular optimization and games provide a framework for the analysis of systems marked by complementarity. We summarize the principal results of these theories and indicate their usefulness by applying them to study the shift…

Recent research has demonstrated that, contrary to the assumption of value maximization, consumer choices are influenced by the configuration of the set of options under consideration (“context effects”). We examine whether two types of context…

This paper demonstrates that, in a simple setting with managerial concern for reputation and asymmetric information on ability, most managers may refrain from undertaking innovations that stochastically dominate an industry standard. Common…

This article argues that the size-related regularities in asset prices should not be regarded as anomalies. Indeed, the opposite result is demonstrated. Namely, a truly anomalous regularity would be if an inverse relation between size and return…