Similar Search Results

Dynamic Compensation Contracts and Capital Structure under Loss Aversion

Hori, Keiichi - 2018

contract using a combination of equity, long-term debt, and a line of credit, we also predict that dividend payments are … relations between dividends, the credit line balance (equity value), the limit of the credit line, and long-term debt. These …

Persistent link: https://www.econbiz.de/10012938648

On Moral Hazard and Persistent Private Information

Vasama, Suvi - 2017

I examine a simple model of dynamic moral hazard in which the agent has persistent private information. I show that despite the complexity of the framework, the problem has a simple solution that can be found using standard methods. The incentives at the optimal contract can be captured using...

Persistent link: https://www.econbiz.de/10012950499

Learning, termination, and payout policy in dynamic incentive contracts

DeMarzo, Peter M.; Sannikov, Yuliy - 2016

We study a principal-agent setting in which both sides learn about future profitability from output, and the project can be abandoned/terminated if profitability is too low. With learning, shirking by the agent both reduces output and lowers the principal's estimate of future profitability. The...

Persistent link: https://www.econbiz.de/10011864825

Information transparency of firm financing

Noël, Antoine L.; Sun, Amy Hongfei - 2021

We propose a theory of optimal firm financing given nested information problems of adverse selection and agency cost. We prove that there exists a unique perfect Bayesian equilibrium with novel features: First, three types of optimal contracts arise endogenously, i.e., equity, transparent debt...

Persistent link: https://www.econbiz.de/10012547888

A Theory of Income Smoothing When Insiders Know More than Outsiders

Acharya, Viral V. - 2012

rights ensure that outside shareholders can enforce a fair payout. To avoid intervention, insiders report income consistent … income and payout process that adjust partially and over time towards a target. Insiders underproduce in an attempt not to …

Persistent link: https://www.econbiz.de/10013109095

A Theory of Income Smoothing When Insiders Know More than Outsiders

Acharya, Viral V. - 2014

We develop a theory of income and payout smoothing by firms when insiders know more about income than outside … shareholders, but property rights ensure that outsiders can enforce a fair payout. Insiders set payout to meet outsiders …' expectations and underproduce to manage downward future expectations. The observed income and payout process are smooth and adjust …

Persistent link: https://www.econbiz.de/10013066995

A Theory of Income Smoothing When Insiders Know More than Outsiders

Acharya, Viral V. - 2015

We develop a theory of income and payout smoothing by firms when insiders know more about income than outside … shareholders, but property rights ensure that outsiders can enforce a fair payout. Insiders set payout to meet outsiders …' expectations and underproduce to manage future expectations downward. The observed income and payout process are smooth and adjust …

Persistent link: https://www.econbiz.de/10013037491