Short-Term versus Long-Term Interests: Capital Structure with Multiple Investors
The authors study the problem of financial contracting and renegotiation between a firm and outside investors when the firm cannot commit to future payouts but assets can be contracted upon. The authors show that a capital structure with multiple investors specializing in short-term and long-term claims is superior to a structure with only one type of claim because this hardens the incentives for the entrepreneur to renegotiate the contract ex post. Depending on the parameters, the optimal capital structure also differentiates between state-independent and state-dependent long-term claims, which can be interpreted as long-term debt and equity. Copyright 1994, the President and Fellows of Harvard College and the Massachusetts Institute of Technology.
Volume (Year): 109 (1994)
Issue (Month): 4 (November)
|Contact details of provider:|| Web page: http://mitpress.mit.edu/journals/|
|Order Information:||Web: http://mitpress.mit.edu/journal-home.tcl?issn=00335533|
When requesting a correction, please mention this item's handle: RePEc:tpr:qjecon:v:109:y:1994:i:4:p:1055-84. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Anna Pollock-Nelson)
If references are entirely missing, you can add them using this form.