A tractable model of limited enforcement and the life-cycle dynamics of firms

Hengjie Ai; Rui Li

doi:10.1016/j.econlet.2017.11.025

A tractable model of limited enforcement and the life-cycle dynamics of firms

Hengjie Ai, Rui Li

Research output: Contribution to journal › Article › peer-review

Abstract

We develop a continuous-time model of optimal lending contracts under limited enforcement and provide closed-form solutions. We characterize the dynamics of firms’ growth rate, Tobin's Q, and capital structure over their life cycles.

Original language	English (US)
Pages (from-to)	136-140
Number of pages	5
Journal	Economics Letters
Volume	163
DOIs	https://doi.org/10.1016/j.econlet.2017.11.025
State	Published - Feb 2018
Externally published	Yes

Bibliographical note

Publisher Copyright:
© 2017

Copyright:
Copyright 2017 Elsevier B.V., All rights reserved.

Keywords

Capital structure
Dynamic contract
Firm dynamics
Limited enforcement

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title = "A tractable model of limited enforcement and the life-cycle dynamics of firms",

abstract = "We develop a continuous-time model of optimal lending contracts under limited enforcement and provide closed-form solutions. We characterize the dynamics of firms{\textquoteright} growth rate, Tobin's Q, and capital structure over their life cycles.",

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A tractable model of limited enforcement and the life-cycle dynamics of firms

Abstract

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Keywords

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