Efficient contracting depends upon imposing risk on the party with superior access to information. Yet the parties in mergers and acquisitions transactions now commonly use Representation and Warranty Insurance (“RWI”) to shift this risk to a...Read more
There is a growing concern about the frequency of renegotiations in Public Private
Partnerships (PPPs). We focus our research on the Portuguese experience and study
254 renegotiation events of 35 PPP contracts since 1995, and examine...Read more
M&A transactions are governed by contracts that exhibit constrained variation ? they are negotiated, yet full of boilerplate, tailored, yet full of patterns and regularities. This paper (a chapter of the Research Handbook on Mergers and...Read more
Holmström (1979) provides a condition for a signal to have positive value assuming the validity of the first-order approach. This paper extends Holmström's analysis to settings where the first-order approach may not hold. We provide a new...Read more
This paper studies the value of more precise signals on agent performance in an optimal contracting model with endogenous effort. With limited liability, the agent's wage is increasing in output only if output exceeds a threshold, else it is zero...Read more
This paper studies the value of additional performance signals under limited liability. We show that -- contrary to the informativeness principle -- informative signals may have no value, because the payment cannot be adjusted to reflect the...Read more
We conjecture that venture capitalists and their investors often fall prey to what is known as ?collective conservatism.? We investigate this conjecture by analyzing boilerplate provisions in limited partnership agreements. When investors accept...Read more
This paper develops a theory of the joint allocation of control and cash-flow rights in venture capital deals. When the need for VC advice and support calls for a highpowered outside claim, the entrepreneur should optimally retain control in...Read more
We examine the within-firm resource allocation and restructuring effects of creditor intervention and their relationship to performance gains at firms violating covenants in private credit agreements. By linking firms to establishment-level data...Read more
Over 20 years, M&A contracts have more than doubled in size ? from 35 to 88 single-spaced pages in this paper?s font. They have also grown significantly in linguistic complexity ? from post-graduate ?grade 20? to post-doctoral ?grade 30?. A...Read more
In the debate over contractual freedom or enabling-versus-mandatory rules in fiduciary law, those who do not adhere to an unbridled contractatian approach tend to justify fiduciary law’s strict posture by appealing to transaction cost reasoning....Read more
