G2TT
来源类型Discussion paper
规范类型论文
来源IDDP12588
DP12588 Optimal Short-Termism
Dirk Hackbarth; Alejandro Rivera; Tak-Yuen Wong
发表日期2018-01-13
出版年2018
语种英语
摘要This paper studies incentives in a dynamic contracting framework of a levered firm. In particular, the manager selects long-term and short-term efforts, while shareholders choose initially optimal leverage and ex-post optimal default policies. There are three results. First, shareholders trade off the benefits of short-termism (current cash flows) against the benefits of higher growth from long-term effort (future cash flows), but because shareholders only split the latter with bondholders, they find short-termism ex-post optimal. Second, bright (grim) growth prospects imply lower (higher) optimal levels of short-termism. Third, the endogenous default threshold rises with the substitutability of tasks and, for a positive correlation of shocks, the endogenous default threshold is hump-shaped in the volatility of permanent shocks, but increases monotonically with the volatility of transitory shocks. Finally, we quantify agency costs of short-term and long-term effort, cost of short-termism, effects of investor time horizons, credit spreads, and risk-shifting.
主题Financial Economics
关键词Capital structure Contracting Multi-tasking
URLhttps://cepr.org/publications/dp12588
来源智库Centre for Economic Policy Research (United Kingdom)
资源类型智库出版物
条目标识符http://119.78.100.153/handle/2XGU8XDN/541399
推荐引用方式
GB/T 7714
Dirk Hackbarth,Alejandro Rivera,Tak-Yuen Wong. DP12588 Optimal Short-Termism. 2018.
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