We formulate a robust theory of liquidity and risk management based on two fundamental frictions: 1) the entrepreneur cannot alienate his human capital, and 2) the entrepreneur worries about model uncertainty and seek robust decisions. In line with max-min expected utility, a robust entrepreneur...

We study the corporate finance implications of risky inalienable human capital for a risk-averse entrepreneur. We show how liquidity and risk management policies coordinate investment and executive compensation policies to efficiently retain managerial talent and honor corporate liabilities. The...