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The lifecycle of the financial sector and other speculative industries

Biais, Bruno; Rochet, Jean-Charles; Woolley, Paul - London School of Economics (LSE) - 2009

Speculative industries exploit novel technologies subject to two risks. First, there is uncertainty about the fundamental value of the innovation: is it strong or fragile? Second, it is difficult to monitor managers, which creates moral hazard. Because of moral hazard, managers earn agency rents...

Persistent link: https://www.econbiz.de/10010744809

Agency, firm growth, and managerial turnover

Anderson, Ronald W.; Bustamante, Maria Cecilia; … - London School of Economics (LSE) - 2012

. We show how the optimal contract can be implemented with a system of deferred compensation credit and bonuses, along with …

Persistent link: https://www.econbiz.de/10010745265

Central banks and financial crises

Buiter, Willem H. - London School of Economics (LSE) - 2008

The paper draws lessons from the experience of the past year for the conduct of central banks in the pursuit of macroeconomic and financial stability. Macroeconomic stability is defined as either price stability or as price stability and sustainable output or employment growth. Financial...

Persistent link: https://www.econbiz.de/10010745389

Loan maturity and renegotiation evidence from the lending practices of large and small banks

Albertazzi, Ugo - London School of Economics (LSE) - 2007

Corporate finance theories suggest that problems of asymmetric information and moral hazard in credit markets can be addressed by choosing short-term maturities. Theories of debt renegotiation suggest that the credibility of the implicit commitment to not make concessions to insolvent borrowers,...

Persistent link: https://www.econbiz.de/10010745643

Choice of corporate risk management tools under moral hazard

Bena, Jan - London School of Economics (LSE) - 2006

, and financial assets under an optimal financing contract that solves moral hazard between insiders and outside investors …

Persistent link: https://www.econbiz.de/10010745872

Enforcement-proof contracts with moral hazard in precaution: ensuring ‘permanence’ in carbon sequestration

MacKenzie, Ian A.; Ohndorf, Markus; Palmer, Charles - London School of Economics (LSE) - 2010

Opportunistic behaviour due to incomplete contract enforcement is a risk in many economic transactions such as forest … carbon sequestration contracts. In this paper, an enforcement-proof incentive contract is developed in which a buyer demands … potential for opportunistic contract breach. The optimal design of forest carbon contracts to ensure permanence is derived …

Persistent link: https://www.econbiz.de/10010745900

The dynamics of venture capital contracts

Bienz, Carsten; Hirsch, Julia - London School of Economics (LSE) - 2005

We analyze the degree of contract completeness with respect to staging of venture capital investments using a hand …-collected German data set of contract data from 464 rounds into 290 entrepreneurial firms. We distinguish three forms of staging (pure … milestone financing, pure round financing and mixes). Thereby, contract completeness reduces when going from pure milestone …

Persistent link: https://www.econbiz.de/10010746202

Moral hazard and renegotiation of multi-signal contracts

Bijapur, Mohan - London School of Economics (LSE) - 2011

standard one period contract, where all information arrives at once. Although increasing the number of contingencies will …

Persistent link: https://www.econbiz.de/10011126387

Robin Hood’s compromise : the economics of moderate land reforms

Bandiera, Oriana; Levy, Gilat - London School of Economics (LSE) - 2004

however do equally well in terms of efficiency and might be more sustainable both financially and politically. …

Persistent link: https://www.econbiz.de/10011071121

Hierarchic contracting

Sanchez, Miguel A.; Hortala-Vallve, Rafael - London School of Economics (LSE) - 2005

We analyze the contracting structure in a moral hazard setting with several agents where output is produced jointly and is the only contractible variable. Since the salary of each agent is a function of all agents efforts, a positive externality arises between them. This externality is not...

Persistent link: https://www.econbiz.de/10010928768