Managers, debt and industry equilibrium
Nier, E.
(1998).
Managers, debt and industry equilibrium.
(Financial Markets Group Discussion Papers 289).
Financial Markets Group, The London School of Economics and Political Science.
This paper reconsiders the strategic effect of debt under the assumption that quantity choices are made by managers whose objective is to avoid bankruptcy. The basic result is that quantity choices, which are strategic substitutes under profit maximization, may turn into strategic complements under reasonable assumptions on the profit function. The value of delegation, optimal wage contracts, and empirical implications are discussed.
| Item Type | Working paper |
|---|---|
| Copyright holders | © 1998 The Author(s) |
| Departments | LSE > Research Centres > Financial Markets Group |
| Date Deposited | 29 Jun 2023 |
| URI | https://researchonline.lse.ac.uk/id/eprint/119152 |