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Financial Contracting: A Survey of Empirical Research and Future Directions

Author

Listed:
  • Michael R. Roberts
  • Amir Sufi

    (The Wharton School, University of Pennsylvania, Philadelphia, Pennsylvania 19104
    Booth School of Business, The University of Chicago, Chicago, Illinois 60637)

Abstract

We review recent evidence and future directions for empirical research on financial contracting in the context of corporate finance. Specifically, we survey evidence pertaining to incentive conflicts, control rights, collateral, renegotiation, and interactions between financial contracts and other governance mechanisms. We also discuss directions for future research, concluding that the financial contracting approach offers a potentially fruitful perspective for empirical researchers seeking to better understand a variety of issues in corporate finance including capital structure, investment policy, payout policy, and corporate governance.

Suggested Citation

  • Michael R. Roberts & Amir Sufi, 2009. "Financial Contracting: A Survey of Empirical Research and Future Directions," Annual Review of Financial Economics, Annual Reviews, vol. 1(1), pages 207-226, November.
    • Handle: RePEc:anr:refeco:v:1:y:2009:p:207-226
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    File URL: http://www.annualreviews.org/doi/abs/10.1146/annurev-financial-071808-145241
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    More about this item

    Keywords

    security design; incentive conflicts; control rights; corporate finance; moral hazard; adverse selection; collateral; renegotiation; corporate governance;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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