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Financial Contracting
Oliver Hart Harvard University - Department of Economics; National Bureau of Economic Research (NBER) April 2001 Harvard Institute of Economic Research Paper No. 1924; Harvard Law and Economics Discussion Paper No. 327 Abstract: This paper discusses how economists' views of firms' financial structure decisions have evolved from treating firms' profitability as given; to acknowledging that managerial actions affect profitability; to recognizing that firm value depends on the allocation of decision or control rights. The paper argues that the decision or control rights approach is useful, even though it is at an early stage of development, and that the approach has some empirical content: it can throw light on the structure of venture capital contracts and the reasons for the diversity of claims.
Keywords: Financial contracting, decision rights, control rights JEL Classifications: D2, G3, L2 Working Paper SeriesDate posted: May 08, 2001 ; Last revised: November 26, 2003Suggested CitationContact Information
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