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Equilibrium corporate finance

Author

Listed:
  • 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.

Suggested Citation

  • Guido Ruta & Piero Gottardi, 2009. "Equilibrium corporate finance," 2009 Meeting Papers 149, Society for Economic Dynamics.
    • Handle: RePEc:red:sed009:149
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    Cited by:

    1. León-Ledesma, Miguel & Orrillo, Jaime, 2021. "Production, bankruptcy, and financial policies under collateral constraints," Mathematical Social Sciences, Elsevier, vol. 112(C), pages 109-119.
    2. Britz, V. & Herings, P.J.J. & Predtetchinski, A., 2010. "Theory of the firm: bargaining and competitive equilibrium," Research Memorandum 057, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
    3. Carvalho, Jaimilton & Orrillo, Jaime & da Silva, Fernanda Rocha Gomes, 2020. "Probability of default in collateralized credit operations for small business," The North American Journal of Economics and Finance, Elsevier, vol. 52(C).
    4. Oren Levintal, 2012. "Equity Capital, Bankruptcy Risk and the Liquidity Trap," Working Papers 2012-07, Bar-Ilan University, Department of Economics.
    5. Miguel Leon-Ledesma & Jaime Orrillo, 2016. "Production and Endogenous Bankruptcy under Collateral Constraints," Studies in Economics 1610, School of Economics, University of Kent.
    6. Acharya, Viral & Bisin, Alberto, 2014. "Counterparty risk externality: Centralized versus over-the-counter markets," Journal of Economic Theory, Elsevier, vol. 149(C), pages 153-182.

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