This paper compares profit sharing and debt contracts in presence of moral hazard. Its originality relatively to the existing studies consists in performing the comparison between the two contracts in a more general context. Firstly, the internal funds of the agent (entrepreneur) are enabled to...

This paper compares sharing (equity) and debt contracts in presence of moral hazard which manifests as the hidden effort undertaken by the entrepreneur. The originality of this paper relatively to the existing studies consists in performing the comparison between the two types of contracts while...

This paper analyses the feasibility of profit and loss sharing (PLS) contracts in presence of moral hazard between the principal (financier) and the agent (entrepreneur). It shows that introducing a rule for sharing profits and losses in contingence with the outcome of the entrepreneur’s...