Publications and forthcoming papers:
Main insight: We study the dynamics of contracts in repeated principal-agent relationships with an impatient agent. Despite the absence of exogenous uncertainty, Pareto-optimal dynamic contracts generically oscillate between favoring the principal and favoring the agent.
(6) "Target Revaluation after Failed Takeover Attempts - Cash versus Stock," 2015, joint with Ulrike Malmendier and Farzad Saidi, forthcoming, Journal of Financial Economics.
Main insight: Cash- and stock-financed takeover bids induce strikingly different target revaluations in response to unsuccessful takeover bids. Targets of cash offers are revalued by +15% after deal failure, whereas stock targets return to their pre-announcement levels. Our results are most consistent with cash bids revealing prior undervaluation of the target. We reconcile our findings with the opposite conclusion in earlier literature (Bradley et al., 1983) by identifying a "look-ahead'' bias built into their sample construction.
(5) “Markup cycles, dynamic misallocation, and amplification," 2014, joint with Christine Parlour & Johan Walden, Journal of Economic Theory, 154, 126-161.
agencies in the face of regulation,'' 2013, joint with Christian C. Opp & Milton Harris, Journal of Financial Economics, 108, 46-61.
risk and technology,'' 2012, Journal of Financial Economics, 103, 113-129.
(2) "Tariff wars in a Ricardian model
with a continuum of goods," 2010, Journal of International
Economics, 80 (2), 212-225.
(1) "Rybczynski's theorem in the
Heckscher-Ohlin world - anything goes," 2009, joint with Hugo
Sonnenschein and Christis Tombazos, Journal of International Economics, 79
Most recent papers:
(8) “Macroprudential bank capital regulation in a competitive financial system,” January 2015, joint with Milton Harris and Christian Opp.
Main insight: If banks face fierce competition from public markets, a small increase in capital requirements can cause an increase in the riskiness of the banking sector. Sufficiently large capital requirements can eliminate risk-taking by banks, but potentially lead to underfunding of socially valuable projects.
(9) “Regulatory reform and risk-taking: replacing ratings,” September 2014, joint with Bo Becker.
Main insight: We expose that a reform of capital regulation for insurance companies in 2009/2010 eliminated (to a first-order approximation) capital requirements for holdings of non-agency mortgage backed securities. Post reform, insurance companies allocate 54% of their purchases of new MBS issues toward non-investment grade assets (as opposed to 6% pre reform).
(10) “Regulating deferred incentive pay,” June 2014, joint with Florian Hoffmann and Roman Inderst.
Main insight: Regulatory restrictions on compensation design such as mandatory deferral of bonus payments can lead to increased risk in the financial sector. Such "backfiring" is particularly likely if capital requirements are high.
"Industrial Asset Pricing," joint with Christine Parlour and Johan Walden.
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