EconPapers    
Economics at your fingertips  
 

Securities Auctions under Moral Hazard: An Experimental Study

Shimon Kogan and John Morgan

Review of Finance, 2010, vol. 14, issue 3, 477-520

Abstract: In many settings, including venture capital financing, mergers and acquisitions, and lease competition, the structure of the contracts over which firms compete differs. Furthermore, the structure of the contract affects the future incentives of the firm to engage in value-creating activities by potentially diluting effort or investment incentives. We study, both theoretically and in the lab, the performance of debt and equity auctions in the presence of both private information and hidden effort. We show that the revenues to sellers in debt and equity auctions differ systematically depending on the returns to entrepreneurial effort. Using a controlled laboratory experiments we test the model's predictions and find strong support for the theory. Copyright 2010, Oxford University Press.

Date: 2010
References: Add references at CitEc
Citations: View citations in EconPapers (26) Track citations by RSS feed

Downloads: (external link)
http://hdl.handle.net/10.1093/rof/rfp008 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Securities Auctions under Moral Hazard: An Experimental Study Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:revfin:v:14:y:2010:i:3:p:477-520

Ordering information: This journal article can be ordered from
http://www.oup.co.uk/journals

Access Statistics for this article

Review of Finance is currently edited by Alex Edmans

More articles in Review of Finance from European Finance Association Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK. Contact information at EDIRC.
Bibliographic data for series maintained by Oxford University Press ().

 
Page updated 2022-09-28
Handle: RePEc:oup:revfin:v:14:y:2010:i:3:p:477-520