Optimal financial contracting and the effects of firm's size

Autor:	Sandro Brusco, Eva Ropero, Giuseppe Lopomo, Alessandro T. Villa
Rok vydání:	2021
Předmět:	Economics and Econometrics State variable Moral hazard 05 social sciences Administración financiera Financial structure Economía de la empresa Microeconomics Capital (economics) 0502 economics and business Economics 050207 economics 050205 econometrics Rate of growth
Zdroj:	The RAND Journal of Economics. 52:446-467
ISSN:	1756-2171 0741-6261
Popis:	We consider the design of the optimal dynamic policy for a firm subject to moral hazard problems. With respect to the existing literature we enrich the model by introducing durable capital with partial irreversibility, which makes the size of the firm a state variable. This allows us to analyze the role of fi rm's size, separately from age and financial structure. We show that a higher level of capital decreases the probability of liquidation and increases the future size of the firm. Although analytical results are not available, we show through simulations that, conditional on size, the rate of growth of the fi rm, its variability and the variability of the probability of liquidation decline with age. Sin financiación 2.250 JCR (2021) Q2, 178/381 Economics 3.037 SJR (2021) Q1, 45/708 Economics and Econometrics No data IDR 2021 UEM
Databáze:	OpenAIRE
Externí odkaz:	https://explore.openaire.eu/search/publication?articleId=doi_dedup___::6f7afdc86910419d471054f23ca632d3 https://doi.org/10.1111/1756-2171.12375 Zobrazit plný text záznamu Plný text ve formátu PDF Plný text ve formátu HTML
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