Dynamic Moral Hazard and Risk-Shifting Incentives in a Leveraged Firm

2019 ◽  
Vol 55 (4) ◽  
pp. 1333-1367 ◽  
Author(s):  
Alejandro Rivera
Keyword(s):  
Moral Hazard ◽  
Empirical Studies ◽  
Risk Shifting ◽  
Optimal Contract ◽  
Positive Relation ◽  
Negative Relation ◽  
Moral Hazard Problem ◽  
Hazard And Risk ◽  
Incentive Constraint ◽  
Monotonic Relation

I develop an analytically tractable model that integrates the risk-shifting problem between bondholders and shareholders with the moral-hazard problem between shareholders and the manager. An optimal contract binds shareholders and the manager, and this contract’s flexibility allows shareholders to relax the manager’s incentive constraint following a “good” profitability shock. Thus, the optimal contract amplifies the upside and thereby increases shareholder appetite for risk shifting. Whereas some empirical studies find a positive relation between risk shifting and leverage, others find a negative relation. This model predicts a non-monotonic relation between risk shifting and leverage and can reconcile these contradictory empirical findings.

Robustness and Linear Contracts

2015 ◽  
Vol 105 (2) ◽  
pp. 536-563 ◽  
Author(s):  
Gabriel Carroll
Keyword(s):  
Moral Hazard ◽  
Functional Form ◽  
Limited Liability ◽  
Optimal Contract ◽  
Worst Case ◽  
Modeling Approach ◽  
Flexible Modeling ◽  
Moral Hazard Problem

We consider a moral hazard problem where the principal is uncertain as to what the agent can and cannot do: she knows some actions available to the agent, but other, unknown actions may also exist. The principal demands robustness, evaluating possible contracts by their worst-case performance, over unknown actions the agent might potentially take. The model assumes risk-neutrality and limited liability, and no other functional form assumptions. Very generally, the optimal contract is linear. The model thus offers a new explanation for linear contracts in practice. It also introduces a flexible modeling approach for moral hazard under nonquantifiable uncertainty. (JEL D81, D82, D86)

scholarly journals Relações Entre Correlação Serial e Volatilidade: Existe o Efeito LeBaron no Brasil?

2014 ◽  
Vol 12 (1) ◽  
pp. 13
Author(s):  
Regis Augusto Ely
Keyword(s):  
Empirical Evidence ◽  
Behavioral Finance ◽  
Serial Correlation ◽  
Empirical Studies ◽  
Variance Ratio ◽  
Positive Relation ◽  
Stylized Facts ◽  
Negative Relation ◽  
First Order ◽  
Daily Returns

This paper examines the relation between serial correlation and volatility of the Ibovespa index returns and extends the empirical evidence of the LeBaron effect for higher orders of serial correlation. We employ an exponential general autoregressive conditional heteroskedastic model to estimate volatility and an automatic variance ratio statistic to calculate serial correlation. The results support some stylized facts from behavioral finance and help us to explain evidences from empirical studies. We show that (i) serial correlation in weekly returns are negative related with volatility, (ii) this negative relation is found in daily returns only if we use first order serial correlation, and (iii) the effect for weekly returns was not intensified by the 2008 crisis, but a positive relation between volatility and serial correlation for daily returns was identified during that time.

Factors affecting behavioural disturbances in race-horses

1998 ◽  
Vol 66 (2) ◽  
pp. 475-481 ◽  
Author(s):  
I. Redbo ◽  
P. Redbo-Torstensson ◽  
F. O. Ödberg ◽  
A. Hedendahl ◽  
J. Holm
Keyword(s):  
External Factors ◽  
Small Field ◽  
Positive Relation ◽  
Main Study ◽  
Social Contacts ◽  
Factors Affecting ◽  
Negative Relation ◽  
Stereotyped Behaviours ◽  
Race Horses ◽  
And Training

AbstractThe aim of the present study was to identify relations between stereotyped behaviours (cribbing, weaving and box-walking) and wood-chewing in thoroughbred flat-racing horses (TB) and standardbred trotters and the different management, feeding and training factors to which these horses are exposed. This was obtained by inquiries to all the professional trainers of TB and trottinghorses used for racing in Sweden. The usable response rates were 61% for trotters and 72% for TB representing 4597 trotters from 234 stables and 644 TB from 38 stables. A small field study was carried out to control the validity of the main study which gave results similar to those in the main study. There was a large difference between the two horse categories in the occurrence of behavioural disturbances. The TB had significantly more stereotypies than the trotters (P < 0·001) but there were no differences in the occurrence of wood-chewing. There were several differences in external factors between the horse categories, e.g. trotters had more opportunities for social contacts with other horses, they also had more free time outside the stable and they were trained a shorter time per week than the TB. The TB were given larger amounts of concentrate than the trotters. Wood-chewing within each horse category was explained by the amount of roughage (P < 0·05 in trotters and P < 0·001 in TB) together with other factors. Stereotypies in the TB were explained by: amount of concentrate (positive relation), number of horses per trainer (positive relation) and amount of roughage (negative relation).

scholarly journals Immunofluorescent microscopy in patients with IgA nephropathy

2019 ◽  
Vol 16 (3) ◽  
pp. 317-323
Author(s):  
K. S. Komissarov ◽  
M. V. Dmitrieva ◽  
T. A. Letkovskaya ◽  
V. S. Pilotovich ◽  
O. V. Krasko
Keyword(s):  
Gradual Increase ◽  
Pathological Findings ◽  
Positive Relation ◽  
Oxford Classification ◽  
Exclusion Criteria ◽  
Negative Relation ◽  
Endothelial Proliferation ◽  
The Oxford Classification ◽  
Acute Reaction ◽  
Igm Deposits

The aim of the study was to evaluate relations between the deposition of IgA, IgG, IgM, C3, C1q and baseline clinical features and pathological findings.According to exclusion criteria, 72 patients with diagnosed primary IgAN who were biopsied from 2015 to 2017 in the district of the Minsk city, Belarus were included for retrospective analysis. All biopsy had to be reviewed according to the Oxford classification (MEST-C). We examined the immunofluorescence staining with antibodies against IgG, IgA, IgM, C3, C1q.Mean age was 32 (26; 42.5) years, 72.2% was men, 48.6% of the patients had arterial hypertension. Median of proteinuria was 870 (355; 1420) mg/day, 8.4% of the patients had isolated hematuria, serum creatinine – 104 (89; 126.5) µmol/l.The patients with 3+ IgA deposits showed a significantly higher percentage of crescents (C1-2) than those with 2+ IgA deposits (p = 0.028). The presence of C3 deposits showed a gradual increase in the percentage of endothelial proliferation (E1) (p = 0.007). The degree of IgA deposits showed a significant negative relation to the IgM deposits (p = 0.01) and a positive relation to the C3 deposits (p = 0.001).We found that the intensity of IgA and C3 deposits is associated with histopathology markers of the acute reaction (C1-2 and E1) according to the Oxford classification. At the same time, the appearance of the IgM deposits testifies the acute phase of the disease as well as the advanced sclerotic stage in some patients.

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