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We are interested in the rate of convergence in L 1 of the approximate solution of a conservation law generated by a monotone finite difference scheme. Kuznetsov has proved that this rate is 1/2 [USSR Comput. We prove, by constructing appropriate initial data for the Cauchy problem, that Kuznetsov's estimates are sharp for a nonlinear flux as well. 1.… (More)
Trading in a secondary stock market not only redistributes wealth among investors but also generates information that guides subsequent investment. We provide a positive theory of disclosure that re ‡ects both functions of the secondary stock market. On one hand, disclosure improves …rm value by ameliorating adverse selection among investors. On the other… (More)
* We are thankful to Sunil Dutta and Stefan Reichelstein for sharing their unpublished notes on the analysis of consumption choice with time-additive preferences.
This paper examines the impact of repeated renegotiation on incentives and managerial tenure when performance information is serially correlated. In addition to providing a general solution to a multi-period agency problem with serially correlated performance measures, the paper characterizes optimal managerial tenure/turnover policies as a function of the… (More)
This paper presents a unified moral hazard framework with renegotiation and anticipated managerial turnover for examining incentive dynamics given correlated performance measures and long-term actions which is applicable to CEO turnover studies and related work on the " horizon problem ". The main contribution is an explicit solution for the dynamic agency… (More)
Using a dynamic LEN model we show how renegotiation based on a non-contractible leading indicator of a forthcoming performance measure introduces demand for discretionary accruals and equilibrium earnings management. In a setting with capital investments, we show how non-discretionary and discretionary accruals combine to alleviate both commitment and… (More)