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Social progress through improved treatment of minority groups (e.g., forbidding racial or sexual harassment) may or may not spread to corporate cultures through competition. We provide a theory of corporate culture, and we show that emergent, progressive corporate cultures can displace existing, regressive ones when the prevailing wage gap is large between majority and minority groups. The model provides testable predictions on racial and gender wage gaps across firms. [ABSTRACT FROM AUTHOR]

Markets and firms offer contrasting methods to arrange production. In markets, contracts govern the purchase of parts and services. In firms, the shared values, customs and norms coming from a corporate culture govern employees' joint development of parts and services. We argue for this distinction as a theory of the firm. Firms exist because corporate culture at times is more efficient to carry out production than are detailed contracts. The firm's boundary encircles the areas of production for which a manager optimally chooses corporate culture as the organizing device. Consistent with empirical evidence, the model explains why some mergers and acquisitions fail, and why corporate cultures are hard to change. [ABSTRACT FROM AUTHOR]

The article focuses on the implications of stablecoins and their potential coexistence with sovereign money, advocating against such coexistence to maintain financial stability and monetary sovereignty. Topics include the historical context of sovereign money monopolies, the economic arguments against stablecoin coexistence, and legislative proposals aimed at regulating stablecoins versus creating sovereign digital currencies.

Agency problems in firms are prevalent because effective corporate monitors are scarce. This paper presents a model that formalizes the scarcity of effective monitors and explores its implications for corporate monitoring mechanisms and ownership structures. We call the most effective monitors - wealthy investors with corporate governance ability – “restructuring specialists”. Their special monitoring ability is a scarce resource in the economy. These restructuring specialists are more effective monitors than coalitions of many small investors run by managers, which face their own agency problems that make them less effective at monitoring. The restructuring specialists have an incentive to acquire blocks for restructuring purposes only in those states of the world in which a restructuring increases firm value the most. This corresponds to a takeover. The restructuring specialists’ investment strategy is an important determinant of corporate ownership structures. Initially dispersed ownership can be optimal only if sufficient liquidity trading allows these special monitors to benefit from state-contingent block acquisitions. The extent of dispersed ownership also depends on the degree of monitoring superiority of the restructuring specialists and the capital available to them, as well as the likelihood that a restructuring may be needed. Firms with initially dispersed ownership and with a financial intermediary as a blockholder can coexist although they are otherwise identical. The model can explain several observations concerning ownership structures and monitoring mechanisms in different developed economies.

Modern financial crises are difficult to explain because they do not always involve bank runs, or the bank runs occur late. For this reason, the first year of the Great Depression, 1930, has remained a puzzle. Industrial production dropped by 20.8 percent despite no nationwide bank run. Using cross-sectional variation in external finance dependence, we demonstrate that banks' decision to not use the discount window and instead cut back lending and invest in safe assets can account for the majority of this decline. In effect, the banks ran on themselves before the crisis became evident. [ABSTRACT FROM AUTHOR]