An extension of a model of financial contracts and labor contracts

Josep Tribó

DEE - Working Papers. Business Economics. WB from Universidad Carlos III de Madrid. Departamento de Economía de la Empresa

Abstract: Using an artiele by Garvey and Swan (GS) 1992 as a benchmark, we extend their model to deal with the issue of the optimal financial structure for a firm when the interaction between labor and fmancial contracts is considered. The GS artiele coneludes that debt financing is Pareto superior to equity financing. We show that once we introduce a model, with more "complete" contracts, and sorne dynamic features, their results are no longer valido

Keywords: Labor; Contracts; Financial; contracts; Debt; Equity (search for similar items in EconPapers)
Date: 1997-12
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Persistent link: https://EconPapers.repec.org/RePEc:cte:wbrepe:7022

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