A Theory of Liquidity and Risk Management Based on the Inalienability of Risky Human Capital

We formulate a dynamic financial contracting problem with risky inalienable human capital. We show that the inalienability of the entrepreneur’s risky human capital not only gives rise to endogenous liquidity limits but also calls for dynamic liquidity and risk management policies via standard securities that firms routinely pursue in practice, such as retained earnings, possible line of credit draw-downs, and hedging via futures and insurance contracts.

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Year of publication:	2015-02
Authors:	Bolton, Patrick ; Wang, Neng ; Yang, Jinqiang
Institutions:	National Bureau of Economic Research (NBER)

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Extent:	application/pdf
Series:	NBER Working Papers.
Type of publication:	Book / Working Paper
Notes:	CF The price is Paper copy available by mail Number 20979
Classification:	G3 - Corporate Finance and Governance ; G32 - Financing Policy; Capital and Ownership Structure
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10011189109