We study bank capital requirements as a tool to address climate-related financial risks and evaluate whether a prudential mandate for bank regulators remains appropriate in the presence of carbon externalities. We show that a prudential mandate maximizes welfare if carbon...

This paper studies security design by bidders with dispersed information about a common-value investment opportunity. Among a broad set of securities, bidders offer debt financing—the flattest securities. A first reason is that debt mitigates bidders' exposure to the winner's curse....

Shocks to a bank’s ability to raise liquidity at short notice can trigger depositor panics. Why don’t banks take a more active role in managing these risks? We study contingent risk management (hedging) in a standard global-games model of a...

Traditionally, fund managers cast votes on behalf of fund investors. Recently, there is a shift towards "pass-through voting," with fund managers offering their investors a choice: delegate their votes to the fund or vote themselves. We develop a theory of...

We study shareholder voting in a model in which trading affects the composition of the shareholder base. Trading and voting are complementary, which gives rise to self-fulfilling expectations about proposal acceptance and multiple equilibria. Prices and shareholder welfare can move...

We analyze how proxy advisors, which sell voting recommendations to shareholders, affect corporate decision-making. If the quality of the advisor's information is low, there is overreliance on its recommendations and insufficient private information production. In contrast, if the advisor's information...