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| Author: | Douglas, A. V. |
| Title: | Endogenous managerial incentives and the optimal combination of debt and dividend commitments |
| Journal: | European Finance Review
2002 : VOL. 6:1, p. 63-99 |
| Index terms: | Information economics Agency theory Financial information systems Endogenous variables Model specification |
| Language: | eng |
| Abstract: | The author studies the optimal combination of debt and dividend commitments in an agency model of firm. Financial policy is relevant because ex-post information asymmetry requires managerial rewards to depend on the ability to meet financial commitments. If perquisite or inside information problems exist in isolation, debt-based incentives as assumed in previous stdies result endogenously. If the problems exist simultaneously, dividends can be optimal even when they appear excessively costly as a signal and unduly lenient as a discipline device. |
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