Martin E. Ruckes

The number and the closeness of bank relationships

Abstract We analyze a firms optimal choice over the number of creditors and the extent of information disclosed to them. By dealing with many creditors and disclosing essential confidential information, a firm can keep its cost of credit low. This, however, is associated with a relatively high probability that valuable information leaks to competitors, leading to lower expected net returns from product market operations. The importance of these two countervailing effects varies with size, time, industry, and the form of the financial sector, which yields a number of empirically testable hypotheses.

Dynamic Incentives in Organizations: Success and Inertia

We present a dynamic model in which an employee of a firm searches for business projects in a changing environment. It is costly to induce the employee who found a successful project in the past period to search for a new project. Past success can therefore result in profitreducing corporate inertia. Still, when the firm chooses to counteract the reluctance to search by increasing the power of the incentives, it stimulates initial search efforts and results in higher profits. Corporate restructuring and increasing the employees authority over time are means to alleviate inertia but may undermine initial search incentives.

Today’s or yesterday’s news?

II. Ereignisstudie, Werteffekte und Analyse der Berichtsfristen . . . . . . . . . . . 711 1. Methodische Grundlagen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 711 2. Datenerhebung . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 714 3. Empirische Ergebnisse zu Werteffekten . . . . . . . . . . . . . . . . . . . . . . 717 4. Empirische Ergebnisse zu Berichtszeiträumen . . . . . . . . . . . . . . . . . . 730

The effects of disclosure policy on risk management incentives and market entry

This paper studies the effects of hedge disclosure requirements on corporate risk management and product market competition. The analysis is based on a simple model of market entry and shows that incumbent firms engage in risk management when these activities remain unobserved by outsiders. The resulting equilibrium is desirable from a social standpoint. Financial markets are well informed and entry is efficient. However, potential attempts for more transparency by additional disclosure requirements introduce a commitment device that provides firms with incentives to distort risk management activities thereby influencing entrant beliefs. In equililibrium, firms engage in significant risk-taking. This behavior limits entry and adversely affects the nature of competition in industries. Our findings thus suggest that more disclosure on risk management may change risk management in socially undesirable ways.