Optimal Long-Term Financial Contracting

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Peter M. DeMarzo; Michael J. Fishman;
(2007)
  • Journal: The Review of Financial Studies, volume 20, issue 6 11, pages 2,079-2,128
  • Identifiers: doi: 10.1093/rfs/hhm031

We develop an agency model of financial contracting. We derive long-term debt, a line of credit, and equity as optimal securities, capturing the debt coupon and maturity; the interest rate and limits on the credit line; inside versus outside equity; dividend policy; and... View more
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