Presentation on theme: "Finance, Control, and Efficiency in Firms SFB TR 15 B3 Institute for Research on Collective Goods."— Presentation transcript:
Finance, Control, and Efficiency in Firms SFB TR 15 B3 Institute for Research on Collective Goods
General Research Questions What are the efficiency implications of availability of funds? How is the answer to this question affected by different modes of governance?
Applications Free Cash Flow, Retained Earnings and the Allocation of Funds for Investment Cross-Subsidization in Public and Private corporations (Hellwig JPubE 2007) Subsidization of Activities from General Tax Revenue (Hellwig 2004/8 Econometrica RfR) Interaction of Distributive and Allocative Concerns (Hellwig 2004/8 Econometrica RfR, Bierbrauer JPET 2009, JPubE 2009)
Incentive Issues Privatization and regulation as a governance mechanism (Bierbrauer 2010) Private governance as an incentive mechanism Credibility problems associated with private governance and self-finance.
Contracting Issues Government regulation versus public management as an variation of complete versus incomplete contracting Vertical integration in three-layer organizations: The tradeoff between vertical integration upstream and vertical integration downstream (Federal Government/Deutsche Bahn Rail/ Deutsche Bahn Transportation)
The Financial Crisis Analyses of the Financial Crises and Reform (Hellwig De Economist 2009) Can No-Bailout Policies be made credible? What are Suitable Mechanisms for containing moral hazard in banks? (Admati, DeMarzo, Hellwig, Pfleiderer 2010)
Debt as Discipline? Calomiris etc.: Debt finance disciplines banks. Therefore, 95 % debt finance is not a cause for worry. Calomiris-Kahn (1991): Debt holders invest in information, run on the bank if they see something bad. This prevents misfeats. It also discourages bad behaviour (Excessive risk taking)
Research Questions How does the tradeoff between the free-rider effect and the redistribution effect of information collection work? Is there a tradeoff between incentives for information acquisition and information use? Could the use of short-term (demandable) debt be explained by overconfidence effects? Could the extensive use of debt finance be explained as excessive risk taking in a world with insufficient commitments rather than optimal contracts? What happens to the Calomiris story if there is equity as well as debt? Would debt holders invest in information? Or would the look at the stock price?