Corporate Finance

This paper presents a framework for addressing normative accounting issues for reporting to shareholders. The framework is an alternative to the emerging Conceptual Framework of the International Accounting Standards Board and the Financial Accounting Standards Board. The framework can be broadly characterized as a utilitarian approach to accounting standard setting. It has two main features. First, accounting is linked to valuation models under which shareholders use accounting information to values their stakes.

How likely is a catastrophic event that would substantially reduce the capital stock, GDP, and wealth? How much should society be willing to pay to reduce the probability or impact of a catastrophe? We answer these questions and provide a framework for policy analysis using a general equilibrium model of production, capital accumulation, and household preferences.

Hedge fund managers trade o the benefits of leveraging on the alpha-generating strategy against the costs of inefficient fund liquidation. In contrast to the standard risk-seeking intuition, even with a constant-return-to-scale alpha-generating strategy, a risk-neutral manager becomes endogenously risk-averse and decreases leverage following poor performance to increase the fund's survival likelihood. Our calibration suggests that management fees are the majority of the total compensation.

In this study of the impact of protests against Walmart (a first entrant) on Target (a second entrant) from 1998 to 2008 in U.S. geographic markets, we develop and test a theory of information spillovers from protests against corporations proposing to enter a new market. We argue that the number of protests directed against a first entrant is a noisy signal for the second entrant because such protests are likely to be dominated by protest-prone activists and so do not reflect the sentiments of the community.

For generations, the Pritzkers, one of the wealthiest and most philanthropic families in the United States, primarily managed their assets in order to enrich the family as a whole, as opposed to generating wealth for individual family members. The Pritzkers were historically publicity shy, but their saga gained much media attention in the early 2000s when some family members questioned the asset distribution and leadership requests of their forefathers.

We track the evolution of financing of residential real estate through the housing boom in the early- to mid-2000s and the resolution of distress during the bust during the late 2000s. Financial innovation, in the form of non-traditional mortgage products and the expansion of alternative lending channels, namely non-agency securitization, fundamentally altered the mortgage landscape during the boom. We describe the impact of these changes in mortgage finance on borrowers and loan performance, as well as their impact on the resolution of distressed mortgages.

Frederic Mishkin comments on Takatoshi Ito's chapter "Great Inflation and Central Bank Independence in Japan," expressing doubt that the Bank of Japan achieved de facto independence in 1975. Rather, he sees the bank as continuously subordinated to government pressure throughout the period. What differed at the end of the 1970s was that the government favored tightening. He also posits that the Japanese experience demonstrates that if the central bank has credibility for low inflation that oil price shocks need not be inflationary.

This paper formally analyzes the biases related to self-reporting in hedge fund databases by matching the quarterly equity holdings of a complete list of 13F-filing hedge fund companies to the union of five major commercial databases of self-reporting hedge funds between 1980 and 2008. We find that funds initiate self-reporting after positive abnormal returns that do not persist into the reporting period. Termination of self-reporting is followed by both return deterioration and outflows from the funds.