Thomas P. Lyon and John W. Maxwell
We develop an economic model of “greenwash,” in which a firm strategically discloses environmental information and an activist may audit and penalize the firm for disclosing positive but not negative aspects of its environmental profile. We fully characterize the model's equilibria, and derive a variety of predictions about disclosure behavior.
I find that when a reseller with market power serves an airline company and only linear contracts are feasible, the airline prefers that the reseller utilizes the Name-Your-Own-Price (NYOP) (a la Priceline) instead of the Posted Price (PP) (a la Hotwire) model.
James M. Malcomson
Risk-neutral individuals take more risky decisions when they have limited liability. Risk-neutral managers may not when acting as agents under contract and taking costly actions to acquire information before taking decisions.
Dirk Czarnitzki and Hanna Hottenrott
We analyze financial constraints on R&D, where we account for heterogeneity among investments that has been neglected in previous literature. According to economic theory, investments should be distinguished by their degree of uncertainty, e.g. routine R&D versus cutting-edge R&D.
Arup Bose, Debashis Pal and David E. M. Sappington
We examine the ability of linear contracts to replicate the performance of optimal unrestricted contracts in the canonical moral hazard setting with a wealth constrained, risk averse agent.
How do multiple attributes of a product jointly determine a seller's disclosure incentives? I model a monopolist whose product is characterized by vertical quality and a horizontal attribute.
Michael D. Grubb
A sender who has disclosable information with probability less than one may partially conceal bad news by choosing to withhold information and pooling with uninformed types. The success of this strategy depends on receivers' beliefs about the probability that the sender has disclosable news. In a dynamic context, informed senders try to cultivate a reputation for reticence either by concealing good news along with the bad, or by concealing some good news and disclosing some bad news.
Oliver M. Dürr and Robert F. Göx
We study the equilibrium accounting and transfer pricing policies in a multinational duopoly with price competition in the final product market. We find that the firms in a duopoly can benefit from strategically using the same transfer price for tax and managerial purposes instead of using separate transfer prices for both objectives.
Thomas J. Chemmanur and Yawen Jiao
We develop a model of the seasoned equity offering (SEO) process, starting from the SEO announcement, through pre-offer trading, and ending in the offering itself. We use our model to advance a new rationale for the existence of the SEO discount and SEO underpricing, and to analyze the role of institutional investors in SEOs.