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Firms, contracts, and financial structure Oliver Hart
Publisher: OUP

Bond covenants exist to restrict these games that shareholders might play, but bond contracts cannot prevent all eventualities. Regional authorities to restrict the range of activities or structure of banking. Another concern is that the redesign of the CEO contract could be driven by the change in capital structure, not by the strong principal. Increasingly, boards of directors have hired CEOs outside their firm. Contemplating the rising levels of temporary employment, Spain introduced subsidies to firms for converting temporary contracts with existing workers into permanent ones and for hiring new workers on permanent contracts. But if the trigger is the firm's capital ratio dipping below a high threshold, the bond is in fact for recovery not for handling abject distress. Herbet Simon, "A Formal Theory of the Employment Relationship," Econometrica, July 1951. Those measures need to be taken without the world slipping into a hard-to-reverse balkanisation of the international financial system. If, at the other end of the spectrum, the trigger is falling below a low capital ratio,. An interesting development of the 1980s, however, was the John Graham and Campbell Harvey (2001) surveyed chief financial officers to gather information about their perspective on the determinants of their firms' financial structure and found support for both the trade-off theory and the pecking order view. In particular, the question dealt with here is whether policies aiming to promote job stability could have an impact on a firm's capital structure and the ability to respond to negative shocks and survive. For those interested in the economics of contracting: Oliver Hart, Firms, Contracts and Financial Structure (1995). "This book, which synthesizes most of Oliver Hart's work since 1980, provides a clear introduction to the modern theory of the firm, and ultimately a very compelling answer to. Firms, Contracts, and Financial Structure.