Essays on Information Structure and Corporate Policies

Abstract

These essays explore the connection between the structure of information and corporate policies. The first essay, "Firm Performance Pay as Insurance for Workers," studies a setting in which non-executive workers compete against each other for promotions into higher level positions. I show that when workers prefer early resolution of uncertainty, information about firm output generates promotion risk, against which firm performance pay insures. The second essay, "Fighting Fire with Fire: Mitigating Information Asymmetry with Open-Market Repurchase Program," analyzes the effects of open-market repurchase programs on liquidity. I find that in the presence of other informed traders, share repurchases generate two competing effects on liquidity trading costs. I provide conditions under which repurchase programs mitigate the adverse selection problem, rather than exacerbate it.