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Corporate Financial Structure, Incentives and Optimal Contracting (Reprint 049)

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Author Info
Franklin Allen
Andrew Winton

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Abstract

The firm can be regarded as consisting of several groups of investors and managers whose interests are regulated by the contracts between them. This survey covers the literature that looks at the nature of optimal financial contracts in the face of various asymmetries of information, control and type. Five areas are considered: (i) costly state verification and agency; (ii) adverse selection; (iii) the allocation of control rights among investors and the design of ownership structure; (iv) the allocation of risk and (v) acquisition of information.

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Paper provided by Wharton School Rodney L. White Center for Financial Research in its series Rodney L. White Center for Financial Research Working Papers with number 15-94.

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Handle: RePEc:fth:pennfi:15-94

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  1. Steven N. Kaplan & Per Stromberg, 2002. "Characteristics, Contracts, and Actions: Evidence from Venture Capitalist Analyses," NBER Working Papers 8764, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  2. Mitchell Berlin & Loretta J. Mester, 1999. "Financial contracts and the legal treatment of informed investors," Working Papers 99-8, Federal Reserve Bank of Philadelphia. [Downloadable!]
  3. Axelson, Ulf, 2005. "Security Design with Investor Private Information," SIFR Research Report Series 37, Institute for Financial Research. [Downloadable!]
  4. Bhagwan Chowdhry & Mark Grinblatt & David Levine, 2002. "Information Aggregation, Security Design and Currency Swaps," NBER Working Papers 8746, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  5. Vesa Kanniainen & Rune Stenbacka, 1997. "Project Monitoring and Banking Competition under Adverse Selection," CIG Working Papers FS IV 97-23, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG), revised Oct 1998. [Downloadable!]
  6. Steven N. Kaplan & Per Strömberg, 2000. "Financial Contracting Theory Meets the Real World: An Empirical Analysis of Venture Capital Contracts," CRSP working papers 513, Center for Research in Security Prices, Graduate School of Business, University of Chicago. [Downloadable!]
    Other versions:
  7. Andrew Winton, 1996. "Monitored finance, liquidity, and institutional investment choice," Working Paper 9616, Federal Reserve Bank of Cleveland. [Downloadable!]
  8. Bhagwan Chowdhry & Mark Grinblatt & David K Levine, 2001. "Information Aggregation, Currency Swaps, and the Design of Derivative Securities," Levine's Working Paper Archive 2106, David K. Levine. [Downloadable!]
    Other versions:
  9. Inderst, Roman & Mueller, Holger M, 2003. "Credit Risk Analysis and Security Design," CEPR Discussion Papers 3686, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  10. Mitchell Berlin & Loretta J. Mester, 2000. "Optimal financial contracts for large investors: the role of lender liability," Working Papers 00-1, Federal Reserve Bank of Philadelphia. [Downloadable!]
    Other versions:
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