Stabsseminar til Yrjö Koskinen

Dr. Yrjö Koskinen, Handelshögskolan i Stockholm, holder stabsseminar ved Institutt for foretaksøkonomi på fredag.

03.10.2000 - Afsoun Sabzian

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

Tid og sted:
Fredag 6. oktober kl. 1215-1330 i Karl Borchs aud.

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 pros-pects 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 information 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. Consequently, the management might be retained after bad results or fired after good results. This weakens the man-agement's incentives to exert effort to produce good current results. Hence, there is a trade-off between increased long term profits due to more informed 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.

Paper kan hentes fra instituttets hjemmeside på internett.