Time-Inconsistent Manager Incentives and Capital Formation

Incentive Pay that Causes Inefficient Managerial Replacement

Monetary policy uncertainty and corporate financial policies: evidence from U.S. public firms

This study examines how monetary policy uncertainty (MPU) affects corporate cash holdings, short-term credit financing, and dividend payout ratios using a quarterly panel of S&P 500 firms from 2008 to 2023. Four MPU measures are employed — market-based, news-based, orthogonalized monetary policy surprises, and FOMC Dis...

Control Overhang and Owner Financial Constraints: Evidence From Equity Issuance

Under the debt overhang problem, firms approaching distress issue too little equity because new capital primarily benefits creditors. We identify an additional mechanism—control overhang—that further suppresses equity issuance for firms with controlling owners. As distress risk rises, equity issuance discounts steepe...

Private Equity Allocation Decisions: Integrating Liquidity, Active Risk, and Investor Circumstances

Private equity can offer return-enhancement potential through liquidity risk premia and manager alpha, but these benefits come with meaningful liquidity and active risk that are not fully incorporated into certain portfolio construction frameworks. In addition, adjusting appraisal-based valuations reduces the apparent...

Taxing Capital to Protect It

This paper studies the composition of taxation when the government cannot fully commit to respecting private returns after investment. A fiscal authority must finance a given expenditure from labor and capital income. Ordinary tax receipts are protected, but an opportunistic executive can seize part of the remaining ca...

Robust Capital Budgeting

We study capital budgeting when a manager privately knows project productivity and her empire-building benefits, while headquarters lacks credible priors. Headquarters minimizes maximum regret relative to informed investment. Without compensation, the optimal policy is a spending cap balancing empire-building overinves...