In recent times, corporate-finance scholars have embraced a methodological approach that looks for “shocks” to evaluate a policy change. These “shocks” are often new laws or court rulings that change some existing rule on a certain day. The researcher then makes predictions about how the world will change with the new rule and examines evidence… Continue reading →
When a principal hires an agent to perform a task, she puts herself at risk of sustaining losses resulting from the agent’s lack of effort. For example, consider a homeowner who hires a plumber to fix a pipe. The plumber can choose to put forth great effort toward a long-lasting fix or to put forth… Continue reading →
Globalization brings tremendous benefits to developed countries, but it also creates ethical dilemmas. For example, American firms can often reduce their production costs by purchasing inputs from foreign suppliers. Problematically, the comparative advantage of some foreign suppliers might be their ability to avoid the costs associated with protecting their workers from injuries and protecting the… Continue reading →
