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

Finance

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

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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10.1016/j.econlet.2017.11.025

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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.",

keywords = "Capital structure, Dynamic contract, Firm dynamics, Limited enforcement",

author = "Hengjie Ai and Rui Li",

year = "2018",

month = feb,

doi = "10.1016/j.econlet.2017.11.025",

language = "English (US)",

volume = "163",

pages = "136--140",

journal = "Economics Letters",

issn = "0165-1765",

publisher = "Elsevier B.V.",

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T1 - A tractable model of limited enforcement and the life-cycle dynamics of firms

AU - Ai, Hengjie

AU - Li, Rui

PY - 2018/2

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N2 - 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.

AB - 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.

KW - Capital structure

KW - Dynamic contract

KW - Firm dynamics

KW - Limited enforcement

UR - https://www.scopus.com/pages/publications/85038934830

UR - https://www.scopus.com/pages/publications/85038934830#tab=citedBy

U2 - 10.1016/j.econlet.2017.11.025

DO - 10.1016/j.econlet.2017.11.025

M3 - Article

AN - SCOPUS:85038934830

SN - 0165-1765

VL - 163

SP - 136

EP - 140

JO - Economics Letters

JF - Economics Letters

ER -

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

Abstract

Bibliographical note

Keywords

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