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Equilibrium corporate finance

  • Guido Ruta

    (NYU)

  • Piero Gottardi

    (EUI Firenze)

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
Contact details of provider: Postal: Society for Economic Dynamics Christian Zimmermann Economic Research Federal Reserve Bank of St. Louis PO Box 442 St. Louis MO 63166-0442 USA
Fax: 1-314-444-8731
Web page: http://www.EconomicDynamics.org/society.htm
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