Managerial opportunism is commonly considered as destructive for the parties involved in an agency relationship. Using a close formulation to Jensen and Meckling’s equity model, we consider an agency relationship between a manager and an investor. The latter is assumed to benefit from a market...

Flow of funds data are used to compare methods of financing the corporate sector in five countries over the period 1970-85. Many of the problems associated with previous studies of corporate finance are avoided by defining financing proportions in net terms. The degree of consolidation of...

This paper offers a new explanation for the prevalent use of convertible securities in venture capital finance. Convertible securities can be used to endogenously allocate cash flow rights as a function of the realized quality of the project. This property can be used to mitigate the double...

The paper addresses the following questions. Does bank lending comprise a relatively large amount of finance for investment in Germany, and, if so, is this a consequence of bank representation on companies' supervisory boards (which, it is argued, reduces information asymmetries)? How strong is...

In this paper we introduce a Cash Flow Model with Float so as to overcome apparent shortcomings that pervade the Standard Cash Flow Model. We deploy the complex structure the float exhibits and this allows not only for strategic financial decision making but a much more sensible use of sources...

A dynamic process underlying firms' discrete financial choices has previously been found, but without controlling for unobserved heterogeneity, this dependence can either be of a "true" nature or an effect of firm-specific characteristics that we cannot observe. This study extends previous...

Foreign direct investment has been one of the main drivers of economic developments over the past few years in Central and Eastern Europe (CEE). Within the ongoing globalization and international division of labor, a large number of foreign companies have established production units in CEE...

Are Russian firms being allowed to clean the slate with respect to the Soviet legacy of obsolete capital stock? If estimates of capital productivity and firm-level efficiency in Soviet industry are correct, enterprise managers in Russia's emerging market economy will lobby for high depreciation...

Cooperative formation in agriculture sometimes occurs in response to the exit of a private firm and typically requires substantial equity investment by participating farmers. What economic rationale can explain why farmers are willing to contribute capital to an activity that fails to attract...