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Too Big to Cheat : Efficiency and Investment in Partnerships
Espino, Emilio - 2014
Many economic activities are organized as partnerships. These ventures are formed with capital contributions by partnership members who obtain a share of ownership in exchange. The design of the partnership dictates how much of the profits is distributed among the members and how much is...
Persistent link: https://www.econbiz.de/10013064788
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Reliance investments, expectation damages and hidden information
Schweizer, Urs - 2006
A setting of reliance investments is explored where one of the parties to a contract obtains private information concerning his utility or cost function that remains hidden to the other party and to courts. As a consequence, it will be a difficult task to award expectation damages corrrectly to...
Persistent link: https://www.econbiz.de/10010365891
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Chapter 2. Agency, Information and Corporate Investment
Stein, Jeremy C. - 2003
This essay surveys the body of research that asks how the efficiency of corporate investment is influenced by problems … that the marginal return to investment in firm i is the same as the marginal return to investment in firm j ? Second, do … capital budgeting process get within-firm allocations right, so that the marginal return to investment in firm i ’s division A …
Persistent link: https://www.econbiz.de/10014023874
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Debt Contracts with Partial Commitment
Kovrijnykh, Natalia - 2014
investment dynamics with partial commitment drastically differ from those with full and no commitment. In particular, investment …
Persistent link: https://www.econbiz.de/10013064322
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Financial constraints and firm capital structure in Kenya
Kirui, Benard Kipyegon; Gor, Seth Omondi - 2018
Empirical evidence suggests that capital structure varies across firms facing different levels of information asymmetry, however, this evidence contradict the prediction of pecking order hypothesis. Although debt capacity constraints offer some explanation for this discrepancy, it fails to...
Persistent link: https://www.econbiz.de/10011771645
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Debt covenant renegotiation and investment
Arnold, Marc; Westermann, Ramona - 2015
, the model reflects empirical credit spread patterns, rationalizes the observed joint distribution of corporate events and … generates novel implications for the impact of renegotiable debt on covenant and investment policies …
Persistent link: https://www.econbiz.de/10011345070
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Inefficiency in a Bilateral Trading Problem with Cooperative Investment
Hori, Kazumi - 2013
A bilateral trading model with investment is considered. In a "cooperative" investment version of the model, the seller …'s investment stochastically determines the buyer's valuation of the good. The value and cost of the good are realized only after … the investment is made, and the investment level and the realization of the good's value and cost are private information …
Persistent link: https://www.econbiz.de/10014195127
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Optimal Leverage and Investment Under Uncertainty
Személy, Béla - 2012
This paper studies the effects of changes in uncertainty on optimal leverage and investment in a dynamic firm … the larger shocks. Initially deleveraging leads to a drop in investment. Investment recovers as entrepreneurs build up net … optimal leverage and investment dynamics. Financial innovation amplifies the effects of uncertainty shocks …
Persistent link: https://www.econbiz.de/10013109171
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Moral Hazard, Investment, and Firm Dynamics
Ai, Hengjie - 2015
We present a dynamic general equilibrium model with heterogeneous firms. Owners of the firms delegate investment … decisions to managers, whose consumption and investment are private information. We solve the optimal incentive compatible … pattern of the relationships between firm size and firms' investment and dividend policies …
Persistent link: https://www.econbiz.de/10013037654
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The Impact of Firm Size on Dynamic Incentives and Investment
Chi, Chang Koo - 2019
explore the effect of this size-dependence regularity on moral hazard and investment, we develop a continuous-time agency …'s effort and the principal's investment decision, and the volatility is proportional to the square root of firm size. We … wages are back-loaded when firm size is small but front-loaded when it is large. Furthermore, there is under-investment in a …
Persistent link: https://www.econbiz.de/10012905816