In Anglo-American law, fiduciary duty is the core legal concept to address conflicts among directors/managers and shareholders. The concept is developed and constantly refined by courts in the process of adjudication. By contrast,...
We develop a theory of income and payout smoothing by firms when insiders know more about income than outside shareholders, but property rights ensure that outsiders can enforce a fair payout. Insiders set payout to meet outsiders?...
This paper forms part of the proceedings for the 6th Annual Berle Symposium (2014), which focused on Margaret Blair and Lynn Stout?s 1999 Virginia Law Review article <a href="http://ssrn.com...Read more
The informativeness principle demonstrates that a contract should depend on informative signals. This paper studies how it should do so. Signals that indicate the output distribution has shifted to the left (e.g. weak industry...
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...
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...
This article studies traditional and modern theories of executive compensation, bringing them together under a simple unifying framework accessible to the general-interest reader. We analyze assignment models of the level of pay,...
The appropriate division of authority between a company?s board and its shareholders has been the central issue in the corporate governance debate for decades. This issue presents most vividly for defensive tactics: the extent to...
In December 2018, a Corporate Governance Code aimed at large private companies was unveiled, the culmination of an industry-led effort in producing a set of best practices in large private companies. These standards would also...
We present a model of media coverage of corporate announcements. Firms strategically use the media to communicate corporate announcements to a group of traders who do not observe announcements directly, but only through media...
This paper develops a theory of governance and inheritance within family firms based on kin altruism (Hamilton, 1964). Family members weigh the payoffs to relatives in proportion to relatedness. The theory shows that family...
This paper presents an industry equilibrium model where firms have a choice to engage in corporate social responsibility (CSR) activities. We model CSR as an investment to increase product differentiation that allows firms to benefit...