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An incomplete contracts approach to financial contracting
We analyze incomplete long-term financial contracts between an entrepreneur with no initial wealth and a wealthy investor. Both agents have potentially conflicting objectives since the entrepreneur…
A theory of predation based on agency problems in financial contracting
- P. Bolton, D. Scharfstein
- Economics
- 1 March 1990
By committing to terminate funding if a firm's performance is poor, investors can mitigate managerial incentive problems. These optimal financial constraints, however, encourage rivals to ensure that…
Contracts as a barrier to entry
It is shown that an incumbent seller who faces a threat of entry into his or her market will sign long-term contracts that prevent the entry of some lower-cost producers even though they do not…
A Theory of Trickle-Down Growth and Development
This paper develops a model of growth and income inequalities in the presence of imperfect capital markets, and it analyses the trickle-down effect of capital accumulation. Moral hazard with limited…
Optimal Debt Structure and the Number of Creditors
- P. Bolton, D. Scharfstein
- EconomicsJournal of Political Economy
- 1 February 1996
Within an optimal contracting framework, we analyze the optimal number of creditors a company borrows from. We also analyze the optimal allocation of security interests among creditors and…
The Credit Ratings Game
- P. Bolton, X. Freixas, Joel D. Shapiro
- Economics
- 1 January 2009
The collapse of so many AAA-rated structured finance products in 2007-2008 has brought renewed attention to the causes of ratings failures and the conflicts of interest in the Credit Ratings…
A Unified Theory of Tobin's Q, Corporate Investment, Financing, and Risk Management
This paper proposes a simple homogeneous dynamic model of investment and corporate risk management for a financially constrained firm. Following Froot, Scharfstein, and Stein (1993), we define a…
Corporate Governance and Control
- Marco Becht, P. Bolton, A. Röell
- Law, Business
- 1 October 2002
Equity, Bonds, and Bank Debt: Capital Structure and Financial Market Equilibrium under Asymmetric Information
- P. Bolton, X. Freixas
- EconomicsJournal of Political Economy
- 30 March 2000
This paper proposes a model of financial markets and corporate finance, with asymmetric information and no taxes, where equity issues, bank debt, and bond financing coexist in equilibrium. The…
The Breakup of Nations: A Political Econ-omy Analysis
A container-conveying arrangement is disclosed, having an endless guided conveyor chain with replaceable chain-guiding and container-engageable conveying caps or pads forming an articulated shingled…
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