search query: @indexterm AUDITING / total: 1120
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| Author: | Caillaud, B. Dionne, G. Jullien, B. |
| Title: | Corporate insurance with optimal financial contracting |
| Journal: | Economic Theory
2000 : VOL. 16:1, p. 77-106 |
| Index terms: | INSURANCE CREDIT AUDITING |
| Language: | eng |
| Abstract: | This paper attempts to rationalize the use of insurance covenants in financial contracts, and shows how external financing generates a demand for insurance by risk-neutral entrepreneurs. In the model, the entrepreneur needs external financing for a risky project that can be affected by an accident during its realization. Accident losses and final returns are private information to the firm, but they can be evaluated by two costly auditing technologies. |
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