Trading
Working Paper
Risk Management Failures
We present a model in which financial firms are engaged in preemptive competition for trading opportunities and the cost of risk management increases with time pressure in financial markets. Because time pressure is in turn endogenous to risk...Read more
Governance Under Common Ownership
Conventional wisdom is that diversification weakens governance by spreading an investor too thinly. We show that, when an investor owns multiple firms ("common ownership"), governance through both voice and exit can strengthen -- even if the...Read more
Lehman Brothers: Did Markets Know?
On September 15, 2008, Lehman Brothers Inc. announced their filing for bankruptcy. This announcement did take markets by surprise causing widespread panic and disruptions in financial systems worldwide. It has been widely argued that financial...Read more
Trading Rules, Competition for Order Flow and Market Fragmentation
We investigate competition between traditional stock exchanges and new ?dark? trading
venues using an important difference in regulatory treatment. SEC required minimum pricing increments constrain some stock spreads, causing large limit...Read more
Conflict of Interest, Secrecy and Insider Information of Directors - A Comparative Analysis
The duty of loyalty is highly developed in Anglo-American countries, while in continental European countries it has only received more hesitant attention. Yet more recently there are tendencies to more convergence. They stem from company law...Read more
Bonus Schemes and Trading Activity
Little is known about how different bonus schemes affect traders' propensity to trade and which bonus schemes improve traders' performance. We study the effects of linear versus threshold (convex) bonus schemes on traders' behavior...Read more
Board Structure and Price Informativeness
We develop and test the hypothesis that private information incorporated into stock prices (price informativeness) affects the structure of corporate boards. We find a negative relation between measures of price informativeness and measures of...Read more