Beneficial \"firm runs\"

Stanley D. Longhofer

Economic Review, 1998, vol. 34, issue Q I, 21-29

Abstract: The author argues that runs, which are generally considered undesirable, also have a beneficial effect--improving lenders' monitoring incentives. Lenders' ability to run on the firm helps control its moral hazard problem, while the first-come, first-served aspect of asset distribution keeps lenders from wanting to free ride on the monitoring efforts of others.

Date: 1998
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