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An extension of a model of financial contracts and labor contracts

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  • Tribo Gine, José Antonio

Abstract

Using an artiele by Garvey and Swan (GS) 1992 as a benchmark, we extend their model to deal with the issue of the optimal financial structure for a firm when the interaction between labor and fmancial contracts is considered. The GS artiele coneludes that debt financing is Pareto superior to equity financing. We show that once we introduce a model, with more "complete" contracts, and sorne dynamic features, their results are no longer valido

Suggested Citation

  • Tribo Gine, José Antonio, 1997. "An extension of a model of financial contracts and labor contracts," DEE - Working Papers. Business Economics. WB 7022, Universidad Carlos III de Madrid. Departamento de Economía de la Empresa.
    • Handle: RePEc:cte:wbrepe:7022
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    References listed on IDEAS

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    1. Garvey, Gerald T. & Swan, Peter L., 1992. "The interaction between financial and employment contracts: A formal model of Japanese Corporate Governance," Journal of the Japanese and International Economies, Elsevier, vol. 6(3), pages 247-274, September.
    2. Garvey, Gerald T & Gaston, Noel, 1997. "A Theory of the Optimal Cost Barrier to Corporate Takeovers," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 38(3), pages 657-675, August.
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    Keywords

    Labor Contracts;

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