Erasmus Finance Seminars

Speaker(s)
Neng Wang (Columbia University in the City of New York, United States)
Date
Tuesday, September 22, 2015
Location
Rotterdam

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.

 

To read the paper click here.