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Equilibrium corporate finance

Author Info

  • Guido Ruta

    (NYU)

  • Piero Gottardi

    (EUI Firenze)

Abstract

In the final sections of the paper we introduce informational asymmetries between the decision maker in the firm (e.g., the manager) and shareholders or equityholders, as in standard corporate finance models. We show that the unanimity and constrained efficiency properties continue to hold with asymmetric information. This is the case both with moral hazard and adverse selection.

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Paper provided by Society for Economic Dynamics in its series 2009 Meeting Papers with number 149.

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Date of creation: 2009
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Handle: RePEc:red:sed009:149
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Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA

Web page: http://www.EconomicDynamics.org/
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Cited by:

  1. Oren Levintal, 2012. "Equity Capital, Bankruptcy Risk and the Liquidity Trap," Working Papers 2012-07, Bar-Ilan University, Department of Economics.

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