Optimal securities under adverse selection and moral hazard

We consider project financing under adverse selection and moral hazard and derive several interesting results. First, we provide an explanation of why good firms issue both debt and underpriced equity (even if the bankruptcy and agency costs of debt are zero). Second, we show that, in the presence of moral hazard, adverse selection may induce the conversion of negative into positive NPV projects leading to an improvement in social welfare. Third, we provide a rationale for the use of warrants. We also show that a debt–warrant combination can implement the optimal contract. Our results have a number of testable implications

The Board of Directors in Greek Football Clubs: 2005-2014

Boards pf Directors of the Greek Syper Leagu

Boards in Greek maritime listed companies: Findings from the fifth annual research

The report discuss findings based on Greek Maritime Firms in relation to the Board

Separation of Powers, Political Competition and Efficient Provision of Public Goods

In this paper we provide a political game where agents decide whether to become legislators or politicians. Legislators determine the political institutions constraining politicians\' behavior and politicians compete for gaining the power to make decisions about the level of the public good. We derive the following results: i) Political competition is a necessary but not a suffcient condition for the elimination of political rents. ii) Agents utilize the separation of powers in order to endogenously select institutions which restrict the power of politicians. iii) In conjunction with political competition, these institutions implement the Lindahl allocation in the economy as a sub-game perfect Nash equilibrium of the political game. iv) As a consequence of the previous result, political rents are zero in equilibrium, in the sense that the winning politician does not extract part of the social surplus because of his power. To the best of our knowledge, this in the only citizen-candidate model with this equilibrium property

An exploration of the effect of organisational demography on board size and leadership structure: Evidence from the Greek manufacturing sector

This study examines how organisational demography (organizational age, organisational size and number of years listed in the Athens Stock Exchange, ATHEX), may impact the board structure (board size, CEO duality and CEO dependence/ independence). The relationships are proposed, under the light of data collected from the annual reports of all 140 manufacturing organisations quoted in the Athens Stock Exchange. Research findings revealed a significantly positive relationship of organisational size, organisational age and number of years that a firm is listed in the Stock Exchange with board size. However, these organisational characteristics do not influence the leadership structure or dependency/independency of the Chairperson to the CEO. While many studies examining the impact of board characteristics on various organisational outputs, including performance, reputation and effectiveness, there are limited studies investigating variables that affect board characteristics and as such the study opens discussion on potential predictors of board.Peer reviewe

Is there a paradox of pledgeability?

We show that in the limited-commitment framework of Donaldson, Gromb, and Piacentino (2019), firm value always increases in the fraction of cash flows that can be pledged as collateral. That is, pledgeability increases investment efficiency and relaxes a firm's financing constraint. We derive this conclusion using the same contracts considered by the authors and generalize the result to an arbitrary number of states. We also show that the first best can always be implemented by a nonstate-contingent secured debt contract, which differs from the ones they consider

Efficient Nash Equilibrium under Adverse Selection

This paper revisits the problem of adverse selection in the insurance market of Rothschild and Stiglitz (1976). We propose a simple extension of the game-theoretic structure in Hellwig (1987) under which Nash-type strategic interaction between the informed customers and the uninformed firms results always in a particular separating equilibrium. The equilibrium allocation is unique and Pareto-efficient in the interim sense subject to incentive-compatibility and individual rationality. In fact, it is the unique neutral optimum in the sense of Myerson (1983).Insurance Market; Adverse Selection; Incentive Efficiency