We survey theoretical developments in the literature on the limits of arbitrage. This literature
investigates how costs faced by arbitrageurs can prevent them from eliminating mispricings …

We find that shocks to the equity capital ratio of financial intermediaries—Primary Dealer
counterparties of the New York Federal Reserve—possess significant explanatory power for …

Non-generally accepted accounting principles (GAAP)(pro forma) earnings form an
increasingly important part of firms' performance reporting narrative. This paper reviews the …

We present a model in which fire sales propagate shocks across bank balance sheets.
When a bank experiences a negative shock to its equity, a natural way to return to target …

ABSTRACT US industrial firms invest heavily in noncash, risky financial assets such as
corporate debt, equity, and mortgage‐backed securities. Risky assets represent 40% of …

We outline several properties of IFRS that potentially affect the contractibility or the
transparency of financial statement information, and hence the use of that information in debt …

We provide evidence that a weak banking sector has contributed to low productivity growth
following the European sovereign debt crisis. An unexpected increase in capital …

This paper studies the interaction between default and liquidity for corporate bonds that are
traded in an over‐the‐counter secondary market with search frictions. Bargaining with …

In this paper we survey the theoretical and empirical literatures on market liquidity. We
organize both literatures around three basic questions:(a) how to measure illiquidity,(b) how …

Fundamental economic principles provide a rationale for requiring financial institutions to
use mark-to-market, or fair value, accounting for financial reporting. The recent turmoil in …