An Economic Analysis of Financial Structure - How Moral Hazard Affects the Choice between Debt and Equity Contracts
3 important questions on An Economic Analysis of Financial Structure - How Moral Hazard Affects the Choice between Debt and Equity Contracts
What is Moral Hazard in Debt and Equity Contracts?
How is Moral hazard called in equity contracts?
• Principal: less information (stockholder)
• Agent: more information (manager)
How is the principle-agent problem created?
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