Optimal Financial Contracting: Control Rights, Incentives, and Entrepreneurship

摘要

Optimal financial contracts are needed when cash flows are costly to verify or non-verifiable.rnIn the presence of potential conflicts between managers and claimholders, the firm's financial policy cannot be costlessly reversed.rnWhen there is an agency problem between investors and management, optimal financial contracting becomes relevant.rnAgency costs are not necessarily additive across contracts.rnBy restricting the use of certain contracts and favoring others, regulations often have unforeseen consequences in the real economy, limiting entrepreneurship and innovation and reducing welfare.