Stabsseminar ved Yrjö Koskinen

Professor Yrjö Koskinen, Stockholm School of Economics, holder stabsseminar ved Institutt for foretaksøkonomi fredag 9. juni.

06.06.2000 - Elin F. Styve

Tema er Debt and Information Acquisition in the Presence of a Large Shareholder

Tid og sted:
Fredag 9. juni 2000, kl. 1215-1330 i Karl Borchs Auditorium

Abstract
We develop a model where the level and maturity of debt contracts affect the large shareholder's incentives to acquire information about the longterm prospects of the firm under the current management. If current results are the only information available, then retaining or firing the management has to be based on these results. If additional infor-mation about the management's capability to produce results in the long-term is available, then this information could also be used in the managerial retention derision. Con-sequently, the management might be retained after bad results or fired after good results. This weakens the management's incentives to exert effort to produce good current results. Hence, there is a trade-off between increased long term profits due to more in-formed managerial retention decisions and management's short term incentives. This, paper shows that short and long-term debt can be used as a commitment mechanism in constraining the behavior of a large shareholder to achieve an optimal amount of information acquisition.

JEL classification: G32, G33, D23.

Paper kan hentes hos Turid Gabrielsen på rom C512 (tlf. 55959284)
www.nhh.no/for/seminars/stabsseminar/2000/090600.pdf