liability exacerbates the incentive problem even further. A Limited Seniority Rule, where the firm may issue senior debt up to …. Shareholder liability, mandatory liability insurance and punitive damages are also discussed"--National Bureau of Economic …

over-leveraging but leads to suboptimal incentives. Lender liability exacerbates the incentive problem even further. A … treated as junior to the tort claim, dominates these alternatives. Shareholder liability, mandatory liability insurance and … ; subordination ; lender liability ; limited seniority ; shareholder liability …