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We consider optimal incentive contracts when managers can, in addition to shirking or diverting funds, increase short term profits by putting the firm at risk of a low probability "disaster." To avoid such risk-taking, investors must cede additional rents to the manager. In a dynamic context,...
Persistent link: https://www.econbiz.de/10013076256
How do firms manage recession risks? We solve a dynamic model with stochastic transitioning between recessions and expansions. In recessions, cash flows decline, cash-flow volatility increases, and both default and external financing costs increase. Firms manage the possibility of future...
Persistent link: https://www.econbiz.de/10014254161
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We study asset-pricing implications of innovation in a general-equilibrium overlapping generations economy. Innovation increases the competitive pressure on existing firms and workers, reducing the profits of existing firms and eroding the human capital of older workers. Due to the lack of...
Persistent link: https://www.econbiz.de/10014199269
We study asset-pricing implications of innovation in a general-equilibrium overlapping-generations economy. Innovation increases the competitive pressure on existing firms and workers, reducing the profits of existing firms and eroding the human capital of older workers. Due to the lack of...
Persistent link: https://www.econbiz.de/10013134275
We provide a theoretical model linking firm characteristics and expected returns. The key ingredient of our model is technological shocks embodied in new capital (IST shocks), which affect the profitability of new investments. Firms' exposure to IST shocks is endogenously determined by the...
Persistent link: https://www.econbiz.de/10013107998
We study asset-pricing implications of innovation in a general-equilibrium overlapping-generations economy. Innovation increases the competitive pressure on existing firms and workers, reducing the profits of existing firms and eroding the human capital of older workers. Due to the lack of...
Persistent link: https://www.econbiz.de/10013150434
Persistent link: https://www.econbiz.de/10009666812
Persistent link: https://www.econbiz.de/10003908887
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