This paper examines the managerial disciplinary role of takeover motivated by pursuit of operational synergies, and explores how this governance function interacts with the ownership structure of target firms. We model a firm in which the manager has private information about the state of economy and may hide her under-provision of effort by misreporting the … More Ownership Structure and Synergistic Takeover: Implications on Corporate Governance (With Chang-Mo Kang)

I develop a theory of optimal capital structure and endogenous ownership for family firms based on a trade-off between maintaining family control and alleviating moral hazard. Depending on the severity of the agency costs of free cash flow, the model generates wide dispersion in leverage ratios, both within the cross-section and across different investor protection … More Optimal Capital Structure of Family Firms (Job Market Paper)

We develop a financial contracting model to analyze the effect of family control on corporate risk-taking. The ex post optimal (second best) risk-taking policy maximizes the controlling party’s interest and usually fails to internalize those of other claimholders. This may give rise to inefficiency as financiers capitalize the risk-taking policy into financial contracts and, therefore, … More A Theory of Family Ownership (with Jin Yu)