In this paper we consider the problem of a firm that needs funding which can be shared between a production plan giving a direct monetary return and some influence activity that increases its reputation in the market and whose outcome is not transferable. Funding is provided by a bank which designs a contract in which a compensation for the firm and an allocation control rule are specified. We verify that, for high returns from the production plan, giving control to the firm exploits complementarity. For low returns from the production plan, the distribution is efficient for any control allocation rule only if we allow for a costly collateral.

Financial contracting with multiple tasks / Fedele, A.; Panaccione, L.. - In: ECONOMIA, SOCIETÀ E ISTITUZIONI. - ISSN 1593-9456. - (2004).

Financial contracting with multiple tasks

Panaccione L.
2004

Abstract

In this paper we consider the problem of a firm that needs funding which can be shared between a production plan giving a direct monetary return and some influence activity that increases its reputation in the market and whose outcome is not transferable. Funding is provided by a bank which designs a contract in which a compensation for the firm and an allocation control rule are specified. We verify that, for high returns from the production plan, giving control to the firm exploits complementarity. For low returns from the production plan, the distribution is efficient for any control allocation rule only if we allow for a costly collateral.
2004
multitasking; control allocation rule; transferability; collateral
01 Pubblicazione su rivista::01a Articolo in rivista
Financial contracting with multiple tasks / Fedele, A.; Panaccione, L.. - In: ECONOMIA, SOCIETÀ E ISTITUZIONI. - ISSN 1593-9456. - (2004).
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11573/1505802
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