A theory of debt and equity: diversity of securities and manager-shareholder congruence

Mathias Dewatripont and Jean Tirole

ULB Institutional Repository from ULB -- Universite Libre de Bruxelles

Abstract: This paper shows how the optimal financial structure of a firm complements incentive schemes to discipline managers, and how the securities’ return streams determine the claim-holders’ incentives to intervene in management. The theory rationalizes (1) the multipUcity of securities, (2) the observed correlation between return streams and control rights of securities, and (3) the partial congruence between managerial and equity-holder preferences over policy choices and monetary rewards as well as the low level of interference of equity in management. The theory also offers new prospects for a reappraisal of the earlier corporate finance literature.

Date: 1994
Note: SCOPUS: ar.j
References: Add references at CitEc
Citations: View citations in EconPapers (358)

Published in: The Quarterly Journal of Economics (1994) v.109 n° 4,p.1027-1054

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Journal Article: A Theory of Debt and Equity: Diversity of Securities and Manager-Shareholder Congruence (1994)
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:ulb:ulbeco:2013/9593

Ordering information: This working paper can be ordered from
http://hdl.handle.ne ... .ulb.ac.be:2013/9593

Access Statistics for this paper

More papers in ULB Institutional Repository from ULB -- Universite Libre de Bruxelles Contact information at EDIRC.
Bibliographic data for series maintained by Benoit Pauwels ().