James Dow

Professor of Finance

MA (Cambridge) PhD (Princeton)

Professor James Dow’s main research interests are the effect of limited arbitrage capital on stock price dynamics, financial fire sales, and bubbles. He has also worked on executive compensation and the role of financial markets on corporate resource allocation decisions. He has served as Editor of the Review of Economic Studies.

He held positions at the University of Pennsylvania and the European University Institute in Florence.

Professor Dow has published in the Journal of Political Economy, The Review of Economic Studies, Econometrica, The Journal of Finance, and The Review of Financial Studies.

His consulting experience includes advice on valuation, the cost of capital, and corporate governance, and expert testimony.

  • Corporate finance
  • Executive compensation and succession
  • Organisational change
  • Arbitrage, information and financial markets


Failing to forecast real events

Dow J; Bond P

Journal of Financial Economics 2021 Vol 142:3 p 1001-1016

Hysteresis in price efficiency and the economics of slow-moving capital

Dow J; Han J; Sangiorgi F

Review of Financial Studies 2021 Vol 34:6 p 2857-2909


The paradox of financial fire sales: the role of arbitrage capital in determining liquidity

Dow J; Jungsuk H

Journal of Finance 2018 Vol 73:1 p 229-274


Incentives for information production in markets where prices affect real investment

Dow J; Goldstein I; Guembel A

Journal of the European Economic Association 2017 Vol 15:4 p 877-909


Contractual incompleteness, limited liability and bubbles

Dow J; Han J

Journal of Financial Economics 2015 Vol 116:2 p 383-409


Boards, CEO entrenchment, and the cost of capital

Dow J

Journal of Financial Economics 2013 Vol 110:3 p 680-695


Noise trade

Dow J; Gorton G

in the New Palgrave Dictionary of Economics, Durlauf S N and Blume L E (eds.)


European corporate bond markets: transparency, liquidity, efficiency

Biais B; Declerck F; Dow J; Portes R; Thadden E-L von

City of London and CEPR, May 2006, pp75


CEO compensation, change and corporate strategy

Dow J; Raposo C

Journal of Finance 2005 December Vol 60:6 p 2701-2727

Equilibrium investment and asset prices under imperfect corporate control

Dow J; Krishnamurthy A; Gorton G

American Economic Review 2005 June Vol 95:3 p 659-681


Is liquidity self-fulfilling?

Dow J

Journal of Business 2004 October Vol 77:4 p 895-908


Informed trading, investment and economic welfare

Dow J; Rahi R

Journal of Business 2003 Vol 76:3 p 439-454


Should speculators be taxed?

Dow J; Rahi R

Journal of Business 2000 January Vol 73:1 p 89-107

What is systematic risk?: moral hazard, initial shocks and propagation

Dow J

Monetary and Economic Studies 2000 December Vol 18:1 p 1-24


Arbitrage, hedging and financial innovation

Dow J

Review of Financial Studies 1998 Vol 11:4 p 739-755

Comments on 'Banks, markets and the allocation of risk in an economy' by M Hellwig

Dow J

Journal of Institutional and Theoretical Economics 1998 Vol 154:1 p 346-351


Noise trading, delegated portfolio management and economic welfare

Dow J; Gorton G

Journal of Political Economy 1997 October Vol 105:5 p 1024-1050

Stock market efficiency and economic efficiency: is there a connection?

Dow J; Gorton G

Journal of Finance 1997 July Vol 52:3 p 1087-1129


Lending resumption in a reputational model of sovereign debt

Dow J; Cole H L; English W B

International Economic Review 1995 May Vol 36:2 p 365-385

Profitable informed trading in a simple general equilibrium model of asset pricing

Dow J; Gorton G

Journal of Economic Theory 1995 November Vol 67:2 p 327-369


Arbitrage chains

Dow J; Gorton G

Journal of Finance 1994 July Vol 49:3 p 819-849

Nash equilibrium under Knightian uncertainty: breaking down backward induction

Dow J; Werlang S R da C

Journal of Economic Theory 1994 December Vol 64:2 p 304-324


Return on the market and the social discount rate: a note on welfare in an overlapping generations model

Dow J; Gorton G

Economics Letters 1993 November Vol 43:1 p 23-26

Trading, communication and the response of asset prices to news

Dow J; Gorton G

Economic Journal 1993 Vol 103:418 p 639-646


Ex-ante non-optimality of the Dempster-Shafer updating rule for ambiguous beliefs

Dow J; Werlang S R da C

in Moses Y ed., Proceedings of the 4th Conference on Theoretical Aspects of Reasoning about Knowledge, p 163-166, Morgan Kaufman, 1992

Excess volatility of stock prices and Knightian uncertainty

Dow J; Werlang S R da C

European Economic Review 1992 January Vol 36 p 631-638

Homothetic preferences

Dow J; Werlang S R da C

Journal of Mathematical Economics 1992 Vol 21 p 389-394

Uncertainty aversion, risk aversion and the optimal choice of portfolio

Dow J; Werlang S R da C

Econometrica 1992 January Vol 60:1 p 197-204


Search decisions with limited memory

Dow J

Review of Economic Studies 1991 January Vol 58:1 p 1-14


Why is capital slow moving? Liquidity hysteresis and the dynamics of informed capital

Dow J; Han J; Sangiorgi F

Social Sciences Research Network


Collateralization, market incompleteness and asset overvaluation

Dow J; Han J

Social Sciences Research Network


Betting on rare and common events

Bond P; Dow J

Working Paper

Optimal contract duration for CEOs

Dow J; Raposo C

IFA Working Paper

Resistance to change

Dow J; Perotti E

IFA Working Paper


Commitment to overinvest and price informativeness

Dow J; Goldstein I; Guembel A

IFA Working Paper


Financing securities trading

Dow J; Rossiensky N

IFA Working Paper


Laws of Large Numbers for Non-Additive Probabilities

Dow J; Ribeiro S

IFA Working Paper


Knightian-rational expections, inflationary inertia and money neutrality

Dow J; Ribeiro J; Simonsen M

Working Paper


No trade theorems and non-Bayesian behaviour

Dow J; Madrigal V; Ribeiro S

Working Paper


Arbitrator and negotiator behaviour under an appellate system

Aschenfelter O; Dow J; Gallagher D

Working Paper

Teaching portfolio

Our teaching offering is updated annually. Faculty and programme material are subject to change.