This paper studies how public information, such as proxy advice, affects shareholder voting and, thus, corporate decision-making. Although public information improves the voting decisions of uninformed shareholders, it also induces privately informed shareholders to sell their shares rather than to vote. As a result, public information impairs information aggregation by voting but improves information aggregation by trading. We show that, overall, public information can undermine corporate decision-making. Furthermore, the effect of more precise public information on corporate decision-making is non-monotonic. Our results give rise to new empirical predictions and have implications for regulation.

This paper proposes a spatial model of imperfect competition in markets with adverse or advantageous selection. The model shows that a reduction in competition exacerbates the inefficiency created by adverse selection, but can ameliorate the inefficiency created by advantageous selection. However, reduced competition never corrects the inefficiency perfectly. In contrast, the inefficiency can be corrected perfectly through a corrective tax when there is perfect competition. Our results have implications for competition policy in credit and insurance markets as they caution against viewing imperfect competition as a solution to the inefficiencies created by selection. 

This paper studies the disclosure of stress test results by a regulator who is privately informed about banks’ health when she chooses the stress scenario. I show that the regulator’s choice of the stress scenario depends on how heterogeneous health is across banks, and I characterize how financial market participants interpret stress test results. There are more runs than when the regulator chooses the scenario before becoming informed, but there can be fewer runs than under full transparency. Moreover, disclosure becomes a source of informational contagion. The model highlights new benefits and risks of using disclosure to avoid runs, and it explains an empirical puzzle. 

This paper shows that central banks face a time inconsistency problem when they disclose stress test results. Before a stress test, they want to appear tough as the threat of revealing bank weakness incentivizes prudent behaviour by banks. Afterwards, they want to act soft by obfuscating bank weakness to reassure financial markets. As a result, it can be optimal to judge multiple banks to pass or fail relative to a common stress severity as this generates intermediate levels of incentives and reassurance.

This paper studies insurance firms that offer contracts in multiple markets with adverse selection. When firms can offer each type of insurance only separately, each market exhibits inefficient underprovision, i.e., unravels. However, I show that the unravelling problem is mitigated when firms are allowed to offer tying contracts that combine different types of insurance. Compared to the case without tying contracts, total surplus is higher but there may be distributional effects. In the extreme, without tying contracts individual markets unravel, but with tying contracts all consumers are fully insured. I discuss implications for the regulation of insurance markets.