Career politicians are among society’s most important people, as their job is crucial for ensuring social cohesion and economic prosperity. Yet, they are rarely a generation’s most talented individuals. More often, instead, they are mediocre people. Where does such mediocrity come from? Is the initial recruitment of politicians important for determining the decision to enter this profession?
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The market for legal services is crucial for the efficient functioning of any economy. This market is also typically one of the least competitive and most protected, especially in advanced economies. Several reform proposals have been advanced in recent years, with the goal of modernizing the profession and making the legal market more competitive. Would market-oriented reforms of the legal profession be beneficial to lawyers, their clients, and the economy?
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The advent of the Internet over the last decade has meant radical changes for retail trading for many goods markets. What are the implications for the future of retail trade? When goods may be of different quality, which are sold through the Internet and which in standard "brick and mortar" shops? Does Internet trading rely on the role of intermediaries who certify the quality of goods to buyers?
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Kellogg Professor Paola Sapienza answered readers' questions on the benefits of the Sarbanes-Oxley Act for shareholders and its compliance costs for listed companies, and on the role of independent directors in corporate governance.

Recent major terrorist attacks caused direct economic damages in the form of physical capital destruction and human losses. They have also raised the perceived level of risk, particularly for people living in big cities. Does this indirect effect have any measurable economic consequences? Have office real estate markets in business districts suffered from the increase in fear and uncertainty following the attacks of 9/11? What are the implications for the future of large metropolitan areas?
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After a wave of particularly destructive corporate scandals - such as the Enron and Arthur Andersen cases - the US Congress passed the Sarbanes-Oxley Act on July 25, 2002. The Act aimed at strengthening control over listed companies and their auditing firms. Has the Act increased stock prices and the operating profits of US firms? Has it affected some firms more than others?
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The huge increase in executive compensation during the last two decades is an issue which has not fully found a clear interpretation. Popular explanations rely on managerial entrenchment, changes in the nature of the executive job, or excessive use of incentive pay. On the other hand, explanations based on competitive and efficient markets are missing. Can a market-based approach account for the increase in executive pay?
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Firms repurchase their own stock when they want to distribute free cash flows, need to fund stock option plans, believe their shares are undervalued, or adjust the firm's capital structure. Although there are several ways to undertake a repurchase, open-market repurchases have become the most common method since the 1980s, dwarfing the magnitude of other methods. Why is this type of purchase so common?
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It is often claimed by firms that "leasing preserves capital", i.e. it spares the company from spending its cash and exhausting its credit lines. However, this claim is not supported by financial theory. If the statement proves to be true, then leasing could be among the most important financial vehicles for firms in financial difficulties, and financial theory would have to account for this.
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At least once in a lifetime, we all face decisions about our occupations. Some prefer to work for established companies, while others prefer to establish their own venture. What dictates this choice? Which individual characteristics define entrepreneurs? To what degree do the economic environment and university education affect the rate of entrepreneurial activity? Have these factors changed over the last few decades?
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