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This paper studies the provision of incentives to reallocate capital when managers are reluctant to relinquish control and have private information about the productivity of assets under their control. We show that when managers get private benefits from running projects substantial bonuses are...
Persistent link: https://www.econbiz.de/10004970357
This paper evaluates quantitatively the macroeconomic implications of corporate governance institutions within a model where the size and distribution of firms and the structure of financial markets are jointly determined. If firms adapt their financing modes to economic conditions, aggregate...
Persistent link: https://www.econbiz.de/10005069570
This paper compares wealth portfolios across countries. The household sector in the US and Canada owns much more financial wealth, and much less housing wealth, than the household sector in most of Europe. We address this fact using a calibrated two sector growth model with endogenous financial...
Persistent link: https://www.econbiz.de/10005085456
This paper investigates the role of financial market frictions on investment and the price of financial asset. We show … investigate the effects of financing constraints on firm level investment behavior. Specifically we derive explicit relations … between investment and Tobin’s q in the presence of financial market imperfections. We show that this relation depends not …
Persistent link: https://www.econbiz.de/10005027254
We develop a model of investment with financial constraints and use it to investigate the relation between investment … correlation between q and investment. We calibrate the model and show that, thanks to this effect, the model can generate … realistic correlations between investment, q and cash flow …
Persistent link: https://www.econbiz.de/10005051248
constrained firms lease capital, while less credit constrained firms buy capital. Our theory is consistent with the explanation of …
Persistent link: https://www.econbiz.de/10005069226
output and investment …
Persistent link: https://www.econbiz.de/10005069211
Persistent link: https://www.econbiz.de/10005069452
Persistent link: https://www.econbiz.de/10004970333
This paper develops a new framework that combines agency problems associated with managerial behavior and firm finance in a dynamic macroeconomic model. Agency costs arise because neither the shareholders nor the debt provider can directly control the manager's choice of how much risk to assume,...
Persistent link: https://www.econbiz.de/10005051422