Access the full text.
Sign up today, get DeepDyve free for 14 days.
R. MacMinn (1987)
Forward Markets, Stock Markets, and the Theory of the FirmJournal of Finance, 42
R. Green, E. Talmor (1985)
The Structure and Incentive Effects of Corporate Tax LiabilitiesJournal of Finance, 40
Douglas Diamond (1984)
Financial Intermediation and Delegated MonitoringThe Review of Economic Studies, 51
Tim Campbell, William Kracaw (1987)
Optimal Managerial Incentive Contracts and the Value of Corporate InsuranceJournal of Financial and Quantitative Analysis, 22
R. Green, E. Talmor (1986)
Asset substitution and the agencycosts of debt financingJournal of Banking and Finance, 10
Gilman (1985)
2Wall Street Journal
Clifford Smith, René Stulz (1985)
The Determinants of Firms' Hedging PoliciesJournal of Financial and Quantitative Analysis, 20
Jensen Jensen, Meckling Meckling (1976)
Theory of the firm: Managerial behavior, agency cost, and capital structureJournal of Financial Economics, 3
D. Mayers, Clifford Smith (1981)
Contractual Provisions, Organizational Structure, and Conflict Control in Insurance MarketsThe Journal of Business, 54
Jensen (1976)
305Journal of Financial Economics, 3
MacMinn (1985)
1167Journal of Finance, 40
Gilman Gilman (1985)
Macy's management group cuts its bid for firm to $68 a share, or $3.48 billionWall Street Journal
R. Green (1984)
Investment incentives, debt, and warrantsJournal of Financial Economics, 13
B. Gavish, A. Kalay (1983)
On the Asset Substitution ProblemJournal of Financial and Quantitative Analysis, 18
Michael Jensen, W. Meckling (1976)
Theory of the Firm
ABSTRACT This paper demonstrates how the incentive of manager‐equityholders to substitute toward riskier assets, commonly referred to as the “asset substitution problem,” is related to the level of observable risk in the firm. When observable and unobservable risks are sufficiently positively correlated, increases (decreases) in observable risk generate the incentive for manager‐equityholders to increase (decrease) unobservable risk. Thus, credible commitments to hedge observable risk can benefit the firm's manager‐equityholders by reducing the incentive to shift risk and the associated agency cost of debt. This provides a positive rationale for hedging diversifiable risk at the firm level.
The Journal of Finance – Wiley
Published: Dec 1, 1990
Read and print from thousands of top scholarly journals.
Already have an account? Log in
Bookmark this article. You can see your Bookmarks on your DeepDyve Library.
To save an article, log in first, or sign up for a DeepDyve account if you don’t already have one.
Copy and paste the desired citation format or use the link below to download a file formatted for EndNote
Access the full text.
Sign up today, get DeepDyve free for 14 days.
All DeepDyve websites use cookies to improve your online experience. They were placed on your computer when you launched this website. You can change your cookie settings through your browser.