Bolton, Patrick 1957-
Overview
| Works: | 200 works in 736 publications in 1 language and 7,663 library holdings |
|---|---|
| Roles: | Author, Editor, Other, Redactor, Contributor, Thesis advisor, Honoree |
| Classifications: | K840, 346.0201 |
Publication Timeline
.
Most widely held works by
Patrick Bolton
Credit markets for the poor by
Patrick Bolton(
)
10 editions published in 2005 in English and held by 1,187 WorldCat member libraries worldwide
"Credit Markets for the Poor demonstrates how weak credit markets are impeding the social and economic mobility of the needy. By detailing the many disadvantages that impoverished people face when seeking to borrow, this new volume highlights a significant national problem and offers solutions for the future."--Jacket
10 editions published in 2005 in English and held by 1,187 WorldCat member libraries worldwide
"Credit Markets for the Poor demonstrates how weak credit markets are impeding the social and economic mobility of the needy. By detailing the many disadvantages that impoverished people face when seeking to borrow, this new volume highlights a significant national problem and offers solutions for the future."--Jacket
Coping with the climate crisis : mitigation policies and global coordination by
Karim El Aynaoui(
)
6 editions published in 2018 in English and held by 1,017 WorldCat member libraries worldwide
Reducing carbon emissions is the most complex political and economic problem humanity has ever confronted. Coping with the Climate Crisis brings together leading experts from academia and policy circles to explore issues related to the implementation of the COP21 Paris Agreement and the challenges of accelerating the transition toward sustainable development. The book synthesizes the key insights that emerge from the latest research in climate-change economics in an accessible and useful guide for policy makers and researchers. Contributors consider a wide range of issues, including the economic implications and realities of shifting away from fossil fuels, the role of financial markets in incentivizing development and construction of sustainable infrastructure, the challenges of evaluating the well-being of future generations, the risk associated with uncertainty surrounding the pace of climate change, and how to make climate agreements enforceable. They demonstrate the need for a carbon tax, considering the issues of efficiently pricing carbon as well as the role of supply-side policies on fossil fuels. Through a range of perspectives from academic economists and practitioners in the public and private sectors who work either at the country level or under the auspices of multilateral organizations, Coping with the Climate Crisis outlines what it will take to achieve a viable, global climate-stabilization path.--
6 editions published in 2018 in English and held by 1,017 WorldCat member libraries worldwide
Reducing carbon emissions is the most complex political and economic problem humanity has ever confronted. Coping with the Climate Crisis brings together leading experts from academia and policy circles to explore issues related to the implementation of the COP21 Paris Agreement and the challenges of accelerating the transition toward sustainable development. The book synthesizes the key insights that emerge from the latest research in climate-change economics in an accessible and useful guide for policy makers and researchers. Contributors consider a wide range of issues, including the economic implications and realities of shifting away from fossil fuels, the role of financial markets in incentivizing development and construction of sustainable infrastructure, the challenges of evaluating the well-being of future generations, the risk associated with uncertainty surrounding the pace of climate change, and how to make climate agreements enforceable. They demonstrate the need for a carbon tax, considering the issues of efficiently pricing carbon as well as the role of supply-side policies on fossil fuels. Through a range of perspectives from academic economists and practitioners in the public and private sectors who work either at the country level or under the auspices of multilateral organizations, Coping with the Climate Crisis outlines what it will take to achieve a viable, global climate-stabilization path.--
Sovereign wealth funds and long-term investing by
Patrick Bolton(
)
18 editions published between 2011 and 2015 in English and held by 1,015 WorldCat member libraries worldwide
Sovereign Wealth Funds (SWFs) are state-owned investment funds with combined asset holdings that are fast approaching four trillion dollars. Recently emerging as a major force in global financial markets, SWFs have other distinctive features besides their state-owned status: they are mainly located in developing countries and are intimately tied to energy and commodities exports, and they carry virtually no liabilities and have little redemption risk, which allows them to take a longer-term investment outlook than most other institutional investors. Edited by a Nobel Laureate, a respected academic at the Columbia Business School, and a longtime international banker and asset manager, this volume examines the specificities of SWFs in greater detail and discusses the implications of their growing presence for the world economy. Based on essays delivered in 2011 at a major conference on SWFs held at Columbia University, this volume discusses the objectives and performance of SWFs, as well as their benchmarks and governance. What are the opportunities for SWFs as long-term investments? How do they fulfill their socially responsible mission? And what role can SWFs play in fostering sustainable development and greater global financial stability? These are some of the crucial questions addressed in this one-of-a-kind volume
18 editions published between 2011 and 2015 in English and held by 1,015 WorldCat member libraries worldwide
Sovereign Wealth Funds (SWFs) are state-owned investment funds with combined asset holdings that are fast approaching four trillion dollars. Recently emerging as a major force in global financial markets, SWFs have other distinctive features besides their state-owned status: they are mainly located in developing countries and are intimately tied to energy and commodities exports, and they carry virtually no liabilities and have little redemption risk, which allows them to take a longer-term investment outlook than most other institutional investors. Edited by a Nobel Laureate, a respected academic at the Columbia Business School, and a longtime international banker and asset manager, this volume examines the specificities of SWFs in greater detail and discusses the implications of their growing presence for the world economy. Based on essays delivered in 2011 at a major conference on SWFs held at Columbia University, this volume discusses the objectives and performance of SWFs, as well as their benchmarks and governance. What are the opportunities for SWFs as long-term investments? How do they fulfill their socially responsible mission? And what role can SWFs play in fostering sustainable development and greater global financial stability? These are some of the crucial questions addressed in this one-of-a-kind volume
Contract theory by
Patrick Bolton(
Book
)
21 editions published between 2004 and 2007 in English and held by 616 WorldCat member libraries worldwide
A comprehensive textbook on contract theory suitable for use by advanced undergraduate and graduate students, covering the areas of agency theory, information economics and organization theory, highlighting common themes and methodologies, and presenting the main ideas in an accessible way
21 editions published between 2004 and 2007 in English and held by 616 WorldCat member libraries worldwide
A comprehensive textbook on contract theory suitable for use by advanced undergraduate and graduate students, covering the areas of agency theory, information economics and organization theory, highlighting common themes and methodologies, and presenting the main ideas in an accessible way
Structuring and restructuring sovereign debt : the role of seniority by
Patrick Bolton(
)
33 editions published between 2005 and 2011 in English and Undetermined and held by 231 WorldCat member libraries worldwide
In an environment characterized by weak contractual enforcement, sovereign lenders can enhance the likelihood of repayment by making their claims more difficult to restructure ex post. We show however, that competition for repayment among lenders may result in a sovereign debt that is excessively difficult to restructure in equilibrium. This inefficiency may be alleviated by a suitably designed bankruptcy regime that facilitates debt restructuring
33 editions published between 2005 and 2011 in English and Undetermined and held by 231 WorldCat member libraries worldwide
In an environment characterized by weak contractual enforcement, sovereign lenders can enhance the likelihood of repayment by making their claims more difficult to restructure ex post. We show however, that competition for repayment among lenders may result in a sovereign debt that is excessively difficult to restructure in equilibrium. This inefficiency may be alleviated by a suitably designed bankruptcy regime that facilitates debt restructuring
Corporate governance and control by
Marco Becht(
)
17 editions published between 2002 and 2011 in English and Undetermined and held by 131 WorldCat member libraries worldwide
Corporate governance is concerned with the resolution of collective action problems among dispersed investors and the reconciliation of conflicts of interest between various corporate claimholders. In this survey we review the theoretical and empirical research on the main mechanisms of corporate control, discuss the main legal and regulatory institutions in different countries, and examine the comparative corporate governance literature. A fundamental dilemma of corporate governance emerges from this overview: regulation of large shareholder intervention may provide better protection to small shareholders; but such regulations may increase managerial discretion and scope for abuse
17 editions published between 2002 and 2011 in English and Undetermined and held by 131 WorldCat member libraries worldwide
Corporate governance is concerned with the resolution of collective action problems among dispersed investors and the reconciliation of conflicts of interest between various corporate claimholders. In this survey we review the theoretical and empirical research on the main mechanisms of corporate control, discuss the main legal and regulatory institutions in different countries, and examine the comparative corporate governance literature. A fundamental dilemma of corporate governance emerges from this overview: regulation of large shareholder intervention may provide better protection to small shareholders; but such regulations may increase managerial discretion and scope for abuse
Relationship and transaction lending in a crisis by
Patrick Bolton(
)
23 editions published between 2013 and 2014 in English and held by 121 WorldCat member libraries worldwide
We study how relationship lending and transaction lending vary over the business cycle. We develop a model in which relationship banks gather information on their borrowers, which allows them to provide loans for profitable firms during a crisis. Due to the services they provide, operating costs of relationship- banks are higher than those of transaction-banks. In our model, where relationship-banks compete with transaction-banks, a key result is that relationship-banks charge a higher intermediation spread in normal times, but offer continuation-lending at more favorable terms than transaction banks to profitable firms in a crisis. Using detailed credit register information for Italian banks before and after the Lehman Brothers' default, we are able to study how relationship and transaction-banks responded to the crisis and we test existing theories of relationship banking. Our empirical analysis confirms the basic prediction of the model that relationship banks charged a higher spread before the crisis, offered more favorable continuation-lending terms in response to the crisis, and suffered fewer defaults, thus confirming the informational advantage of relationship banking
23 editions published between 2013 and 2014 in English and held by 121 WorldCat member libraries worldwide
We study how relationship lending and transaction lending vary over the business cycle. We develop a model in which relationship banks gather information on their borrowers, which allows them to provide loans for profitable firms during a crisis. Due to the services they provide, operating costs of relationship- banks are higher than those of transaction-banks. In our model, where relationship-banks compete with transaction-banks, a key result is that relationship-banks charge a higher intermediation spread in normal times, but offer continuation-lending at more favorable terms than transaction banks to profitable firms in a crisis. Using detailed credit register information for Italian banks before and after the Lehman Brothers' default, we are able to study how relationship and transaction-banks responded to the crisis and we test existing theories of relationship banking. Our empirical analysis confirms the basic prediction of the model that relationship banks charged a higher spread before the crisis, offered more favorable continuation-lending terms in response to the crisis, and suffered fewer defaults, thus confirming the informational advantage of relationship banking
Executive compensation and short-termist behavior in speculative markets by
Patrick Bolton(
)
15 editions published between 2003 and 2011 in English and Undetermined and held by 120 WorldCat member libraries worldwide
We present a multiperiod agency model of stock based executive compensation in a speculative stock market, where investors are overconfident and stock prices may deviate from underlying fundamentals and include a speculative option component. This component arises from the option to sell the stock in the future to potentially overoptimistic investors. We show that optimal compensation contracts may emphasize short-term stock performance, at the expense of long run fundamental value, as an incentive to induce managers to pursue actions which increase the speculative component in the stock price. Our model provides a different perspective for the recent corporate crisis than the increasingly popular `rent extraction view' of executive compensation
15 editions published between 2003 and 2011 in English and Undetermined and held by 120 WorldCat member libraries worldwide
We present a multiperiod agency model of stock based executive compensation in a speculative stock market, where investors are overconfident and stock prices may deviate from underlying fundamentals and include a speculative option component. This component arises from the option to sell the stock in the future to potentially overoptimistic investors. We show that optimal compensation contracts may emphasize short-term stock performance, at the expense of long run fundamental value, as an incentive to induce managers to pursue actions which increase the speculative component in the stock price. Our model provides a different perspective for the recent corporate crisis than the increasingly popular `rent extraction view' of executive compensation
Conflicts of interest, information provision, and competition in banking by
Patrick Bolton(
)
15 editions published between 2004 and 2011 in English and Undetermined and held by 118 WorldCat member libraries worldwide
In some markets, such as the market for drugs or for financial services, sellers have better information than buyers regarding the matching between the buyer's needs and the good's actual characteristics. Depending on the market structure, this may lead to conflicts of interest and/or the under-provision of information by the seller. This paper studies this issue in the market for financial services. The analysis presents a new model of competition between banks, as banks' price competition influences the ensuing incentives for truthful information revelation. We compare two different firm structures, specialized banking, where financial institutions provide a unique financial product, and one-stop banking, where a financial institution is able to provide several financial products which are horizontally differentiated. We show first that, although conflicts of interest may prevent information disclosure under monopoly, competition forces full information provision for sufficiently high reputation costs. Second, in the presence of market power, one-stop banks will use information strategically to increase product differentiation and therefore will always provide reliable information and charge higher prices than specialized banks, thus providing a new reason for the creation of one-stop banks. Finally, we show that, if independent financial advisers are able to provide reliable information, this increases product differentiation and therefore market power, so that it is in the interest of financial intermediaries to promote external independent financial advice
15 editions published between 2004 and 2011 in English and Undetermined and held by 118 WorldCat member libraries worldwide
In some markets, such as the market for drugs or for financial services, sellers have better information than buyers regarding the matching between the buyer's needs and the good's actual characteristics. Depending on the market structure, this may lead to conflicts of interest and/or the under-provision of information by the seller. This paper studies this issue in the market for financial services. The analysis presents a new model of competition between banks, as banks' price competition influences the ensuing incentives for truthful information revelation. We compare two different firm structures, specialized banking, where financial institutions provide a unique financial product, and one-stop banking, where a financial institution is able to provide several financial products which are horizontally differentiated. We show first that, although conflicts of interest may prevent information disclosure under monopoly, competition forces full information provision for sufficiently high reputation costs. Second, in the presence of market power, one-stop banks will use information strategically to increase product differentiation and therefore will always provide reliable information and charge higher prices than specialized banks, thus providing a new reason for the creation of one-stop banks. Finally, we show that, if independent financial advisers are able to provide reliable information, this increases product differentiation and therefore market power, so that it is in the interest of financial intermediaries to promote external independent financial advice
Toward a statutory approach to sovereign debt restructuring : lessons from corporate bankruptcy practice around the world by
Patrick Bolton(
)
13 editions published between 2003 and 2011 in English and Undetermined and held by 114 WorldCat member libraries worldwide
Annotation
13 editions published between 2003 and 2011 in English and Undetermined and held by 114 WorldCat member libraries worldwide
Annotation
Sovereign default risk and bank fragility in financially integrated economies by
Patrick Bolton(
)
15 editions published in 2011 in English and held by 103 WorldCat member libraries worldwide
We analyze contagious sovereign debt crises in financially integrated economies. Under financial integration banks optimally diversify their holdings of sovereign debt in an effort to minimize the costs with respect to an individual country's sovereign debt default. While diversification generates risk diversification benefits ex ante, it also generates contagion ex post. We show that financial integration without fiscal integration results in an inefficient equilibrium supply of government debt. The safest governments inefficiently restrict the amount of high quality debt that could be used as collateral in the financial system and the riskiest governments issue too much debt, as they do not take account of the costs of contagion. Those inefficiencies can be removed by various forms of fiscal integration, but fiscal integration typically reduce the welfare of the country that provides the "safe-haven" asset below the autarky level
15 editions published in 2011 in English and held by 103 WorldCat member libraries worldwide
We analyze contagious sovereign debt crises in financially integrated economies. Under financial integration banks optimally diversify their holdings of sovereign debt in an effort to minimize the costs with respect to an individual country's sovereign debt default. While diversification generates risk diversification benefits ex ante, it also generates contagion ex post. We show that financial integration without fiscal integration results in an inefficient equilibrium supply of government debt. The safest governments inefficiently restrict the amount of high quality debt that could be used as collateral in the financial system and the riskiest governments issue too much debt, as they do not take account of the costs of contagion. Those inefficiencies can be removed by various forms of fiscal integration, but fiscal integration typically reduce the welfare of the country that provides the "safe-haven" asset below the autarky level
Thinking ahead : the decision problem by
Patrick Bolton(
)
12 editions published in 2005 in English and held by 102 WorldCat member libraries worldwide
We propose a model of bounded rationality based on time-costs of deliberating current and future decisions. We model an individual decision maker's thinking process as a thought-experiment that takes time and let the decision maker "think ahead" about future decision problems in yet unrealized states of nature. By formulating an intertemporal, state-contingent, planning problem, which may involve costly deliberation in every state of nature, and by letting the decision-maker deliberate ahead of the realization of a state, we attempt to capture the basic idea that individuals generally do not think through a complete action-plan. Instead, individuals prioritize their thinking and leave deliberations on less important decisions to the time or event when they arise
12 editions published in 2005 in English and held by 102 WorldCat member libraries worldwide
We propose a model of bounded rationality based on time-costs of deliberating current and future decisions. We model an individual decision maker's thinking process as a thought-experiment that takes time and let the decision maker "think ahead" about future decision problems in yet unrealized states of nature. By formulating an intertemporal, state-contingent, planning problem, which may involve costly deliberation in every state of nature, and by letting the decision-maker deliberate ahead of the realization of a state, we attempt to capture the basic idea that individuals generally do not think through a complete action-plan. Instead, individuals prioritize their thinking and leave deliberations on less important decisions to the time or event when they arise
From global savings glut to financing infrastructure the advent of investment platforms by
Rabah Arezki(
)
4 editions published between 2015 and 2016 in English and held by 101 WorldCat member libraries worldwide
This paper investigates the emerging global landscape for public-private co-investments in infrastructure. The creation of the Asian Infrastructure Investment Bank and other so-called 'infrastructure investment platforms' are an attempt to tap into the pool of both public and private long-term savings in order to channel the latter into much needed infrastructure projects. This paper puts these new initiatives into perspective by critically reviewing the literature and experience with public private partnerships in infrastructure. It concludes by identifying the main challenges policy makers and other actors will need to confront going forward and to turn infrastructure into an asset class of its own
4 editions published between 2015 and 2016 in English and held by 101 WorldCat member libraries worldwide
This paper investigates the emerging global landscape for public-private co-investments in infrastructure. The creation of the Asian Infrastructure Investment Bank and other so-called 'infrastructure investment platforms' are an attempt to tap into the pool of both public and private long-term savings in order to channel the latter into much needed infrastructure projects. This paper puts these new initiatives into perspective by critically reviewing the literature and experience with public private partnerships in infrastructure. It concludes by identifying the main challenges policy makers and other actors will need to confront going forward and to turn infrastructure into an asset class of its own
Pay for short-term performance : executive compensation in speculative markets by
Patrick Bolton(
)
14 editions published between 2006 and 2011 in English and Undetermined and held by 97 WorldCat member libraries worldwide
We argue that the root cause behind the recent corporate scandals associated with CEO pay is the technology bubble of the latter half of the 1990s. Far from rejecting the optimal incentive contracting theory of executive compensation, the recent evidence on executive pay can be reconciled with classical agency theory once one expands the framework to allow for speculative stock markets
14 editions published between 2006 and 2011 in English and Undetermined and held by 97 WorldCat member libraries worldwide
We argue that the root cause behind the recent corporate scandals associated with CEO pay is the technology bubble of the latter half of the 1990s. Far from rejecting the optimal incentive contracting theory of executive compensation, the recent evidence on executive pay can be reconciled with classical agency theory once one expands the framework to allow for speculative stock markets
Optimal property rights in financial contracting by
Kenneth Michael Ayotte(
)
12 editions published between 2007 and 2011 in English and Undetermined and held by 96 WorldCat member libraries worldwide
In this paper we propose a theory of optimal property rights in a financial contracting setting. Following recent contributions in the property law literature, we emphasize the distinction between contractual rights, that are only enforceable against the parties themselves, and property rights, that are also enforeceable against third parties outside the contract. Our analysis starts with the following question: which contractual agreements should the law allow parties to enforce as property rights? Our proposed answer to this question is shaped by the overall objective of minimizing due diligence (reading) costs and investment distortions that follow from the inability of third-party lenders to costlessly observe pre-existing rights in a borrower's property. Borrowers cannot reduce these costs without the law's help, due to an inability to commit to protecting third-parties from redistribution. We find that the law should take a more restrictive approach to enforcing rights against third-parties when these rights are i) more costly for third-parties to discover, ii) more likely to redistribute value from third-parties, and iii) less likely to increase efficiency. We find that these qualitative principles are often reflected in observed legal rules, including the enforceability of negative covenants; fraudulent conveyance; corporate veil-piercing; and limits on assignability
12 editions published between 2007 and 2011 in English and Undetermined and held by 96 WorldCat member libraries worldwide
In this paper we propose a theory of optimal property rights in a financial contracting setting. Following recent contributions in the property law literature, we emphasize the distinction between contractual rights, that are only enforceable against the parties themselves, and property rights, that are also enforeceable against third parties outside the contract. Our analysis starts with the following question: which contractual agreements should the law allow parties to enforce as property rights? Our proposed answer to this question is shaped by the overall objective of minimizing due diligence (reading) costs and investment distortions that follow from the inability of third-party lenders to costlessly observe pre-existing rights in a borrower's property. Borrowers cannot reduce these costs without the law's help, due to an inability to commit to protecting third-parties from redistribution. We find that the law should take a more restrictive approach to enforcing rights against third-parties when these rights are i) more costly for third-parties to discover, ii) more likely to redistribute value from third-parties, and iii) less likely to increase efficiency. We find that these qualitative principles are often reflected in observed legal rules, including the enforceability of negative covenants; fraudulent conveyance; corporate veil-piercing; and limits on assignability
Satisficing contracts by
Patrick Bolton(
)
11 editions published between 2008 and 2010 in English and Undetermined and held by 93 WorldCat member libraries worldwide
We propose a model of equilibrium contracting between two agents who are "boundedly rational" in the sense that they face time-costs of deliberating current and future transactions. We show that equilibrium contracts may be incomplete and assign control rights: they may leave some enforceable future transactions unspecified and instead specify which agent has the right to decide these transactions. Control rights allow the controlling agent to defer time-consuming deliberations on those transactions to a later date, making her less inclined to prolong negotiations over an initial incomplete contract. Still, agents tend to resolve conflicts up-front by writing more complete initial contracts. A more complete contract can take the form of either a finer adaptation to future contingencies, or greater coarseness. Either way, conflicts among contracting agents tend to result in excessively complete contracts in the sense that the maximization of joint payoffs would result in less up-front deliberation
11 editions published between 2008 and 2010 in English and Undetermined and held by 93 WorldCat member libraries worldwide
We propose a model of equilibrium contracting between two agents who are "boundedly rational" in the sense that they face time-costs of deliberating current and future transactions. We show that equilibrium contracts may be incomplete and assign control rights: they may leave some enforceable future transactions unspecified and instead specify which agent has the right to decide these transactions. Control rights allow the controlling agent to defer time-consuming deliberations on those transactions to a later date, making her less inclined to prolong negotiations over an initial incomplete contract. Still, agents tend to resolve conflicts up-front by writing more complete initial contracts. A more complete contract can take the form of either a finer adaptation to future contingencies, or greater coarseness. Either way, conflicts among contracting agents tend to result in excessively complete contracts in the sense that the maximization of joint payoffs would result in less up-front deliberation
The credit ratings game by
Patrick Bolton(
)
11 editions published between 2008 and 2011 in English and Undetermined and held by 93 WorldCat member libraries worldwide
The spectacular failure of top-rated structured finance products has brought renewed attention to the conflicts of interest of Credit Rating Agencies (CRAs). We model both the CRA conflict of understating credit risk to attract more business, and the issuer conflict of purchasing only the most favorable ratings (issuer shopping), and examine the effectiveness of a number of proposed regulatory solutions of CRAs. We find that CRAs are more prone to inflate ratings when there is a larger fraction of naive investors in the market who take ratings at face value, or when CRA expected reputation costs are lower. To the extent that in booms the fraction of naive investors is higher, and the reputation risk for CRAs of getting caught understating credit risk is lower, our model predicts that CRAs are more likely to understate credit risk in booms than in recessions. We also show that, due to issuer shopping, competition among CRAs in a duopoly is less efficient (conditional on the same equilibrium CRA rating policy) than having a monopoly CRA, in terms of both total ex-ante surplus and investor surplus. Allowing tranching decreases total surplus further. We argue that regulatory intervention requiring upfront payments for rating services (before CRAs propose a rating to the issuer) combined with mandatory disclosure of any rating produced by CRAs can substantially mitigate the conflicts of interest of both CRAs and issuers
11 editions published between 2008 and 2011 in English and Undetermined and held by 93 WorldCat member libraries worldwide
The spectacular failure of top-rated structured finance products has brought renewed attention to the conflicts of interest of Credit Rating Agencies (CRAs). We model both the CRA conflict of understating credit risk to attract more business, and the issuer conflict of purchasing only the most favorable ratings (issuer shopping), and examine the effectiveness of a number of proposed regulatory solutions of CRAs. We find that CRAs are more prone to inflate ratings when there is a larger fraction of naive investors in the market who take ratings at face value, or when CRA expected reputation costs are lower. To the extent that in booms the fraction of naive investors is higher, and the reputation risk for CRAs of getting caught understating credit risk is lower, our model predicts that CRAs are more likely to understate credit risk in booms than in recessions. We also show that, due to issuer shopping, competition among CRAs in a duopoly is less efficient (conditional on the same equilibrium CRA rating policy) than having a monopoly CRA, in terms of both total ex-ante surplus and investor surplus. Allowing tranching decreases total surplus further. We argue that regulatory intervention requiring upfront payments for rating services (before CRAs propose a rating to the issuer) combined with mandatory disclosure of any rating produced by CRAs can substantially mitigate the conflicts of interest of both CRAs and issuers
Credit default swaps and the empty creditor problem by
Patrick Bolton(
)
9 editions published between 2010 and 2015 in English and held by 92 WorldCat member libraries worldwide
Commentators have raised concerns about the empty creditor problem that arises when a debtholder has obtained insurance against default but otherwise retains control rights in and outside bankruptcy. We analyze this problem from an ex-ante and ex-post perspective in a formal model of debt with limited commitment, by comparing contracting outcomes with and without credit default swaps (CDS). We show that CDS, and the empty creditors they give rise to, have important ex-ante commitment benefits: By strengthening creditors' bargaining power they raise the debtor's pledgeable income and help reduce the incidence of strategic default. However, we also show that lenders will over-insure in equilibrium, giving rise to an inefficiently high incidence of costly bankruptcy. We discuss a number of remedies that have been proposed to overcome the inefficiency resulting from excess insurance
9 editions published between 2010 and 2015 in English and held by 92 WorldCat member libraries worldwide
Commentators have raised concerns about the empty creditor problem that arises when a debtholder has obtained insurance against default but otherwise retains control rights in and outside bankruptcy. We analyze this problem from an ex-ante and ex-post perspective in a formal model of debt with limited commitment, by comparing contracting outcomes with and without credit default swaps (CDS). We show that CDS, and the empty creditors they give rise to, have important ex-ante commitment benefits: By strengthening creditors' bargaining power they raise the debtor's pledgeable income and help reduce the incidence of strategic default. However, we also show that lenders will over-insure in equilibrium, giving rise to an inefficiently high incidence of costly bankruptcy. We discuss a number of remedies that have been proposed to overcome the inefficiency resulting from excess insurance
A unified theory of Tobin's q, corporate investment, financing, and risk management by
Patrick Bolton(
)
9 editions published between 2009 and 2011 in English and Undetermined and held by 91 WorldCat member libraries worldwide
This paper proposes a simple homogeneous dynamic model of investment and corporate risk management for a financially constrained firm. Following Froot, Scharfstein, and Stein (1993), we define a corporation's risk management as the coordination of investment and financing decisions. In our model, corporate risk management involves internal liquidity management, financial hedging, and investment. We determine a firm's optimal cash, investment, asset sales, credit line, external equity finance, and payout policies as functions of the following key parameters: 1) the firm's earnings growth and cash-flow risk; 2) the external cost of financing; 3) the firm's liquidation value; 4) the opportunity cost of holding cash; 5) investment adjustment and asset sales costs; and 6) the return and covariance characteristics of hedging assets the firm can invest in. The optimal cash inventory policy takes the form of a double-barrier policy where i) cash is paid out to shareholders only when the cash-capital ratio hits an endogenous upper barrier, and ii) external funds are raised only when the firm has depleted its cash. In between the two barriers, the firm adjusts its capital expenditures, asset sales, and hedging policies. Several new insights emerge from our analysis. For example, we find an inverse relation between marginal Tobin's q and investment when the firm draws on its credit line. We also find that financially constrained firms may have a lower equity beta in equilibrium because these firms tend to hold higher precautionary cash inventories
9 editions published between 2009 and 2011 in English and Undetermined and held by 91 WorldCat member libraries worldwide
This paper proposes a simple homogeneous dynamic model of investment and corporate risk management for a financially constrained firm. Following Froot, Scharfstein, and Stein (1993), we define a corporation's risk management as the coordination of investment and financing decisions. In our model, corporate risk management involves internal liquidity management, financial hedging, and investment. We determine a firm's optimal cash, investment, asset sales, credit line, external equity finance, and payout policies as functions of the following key parameters: 1) the firm's earnings growth and cash-flow risk; 2) the external cost of financing; 3) the firm's liquidation value; 4) the opportunity cost of holding cash; 5) investment adjustment and asset sales costs; and 6) the return and covariance characteristics of hedging assets the firm can invest in. The optimal cash inventory policy takes the form of a double-barrier policy where i) cash is paid out to shareholders only when the cash-capital ratio hits an endogenous upper barrier, and ii) external funds are raised only when the firm has depleted its cash. In between the two barriers, the firm adjusts its capital expenditures, asset sales, and hedging policies. Several new insights emerge from our analysis. For example, we find an inverse relation between marginal Tobin's q and investment when the firm draws on its credit line. We also find that financially constrained firms may have a lower equity beta in equilibrium because these firms tend to hold higher precautionary cash inventories
Leadership, coordination and mission-driven management by
Patrick Bolton(
)
11 editions published between 2008 and 2011 in English and Undetermined and held by 91 WorldCat member libraries worldwide
What makes a good leader? A good leader is able to coordinate his followers around a credible mission statement, which communicates the future course of action of the organization. In practice, leaders learn about the best course of action for the organization over time. While learning helps improve the organization's goals it also creates a time-consistency problem. Leader resoluteness is a valuable attribute in such a setting, since it slows down the leader's learning and thus improves the credibility of the mission statement. But resolute leaders also inhibit communication with followers and leader resoluteness is costly when followers have sufficiently valuable signals
11 editions published between 2008 and 2011 in English and Undetermined and held by 91 WorldCat member libraries worldwide
What makes a good leader? A good leader is able to coordinate his followers around a credible mission statement, which communicates the future course of action of the organization. In practice, leaders learn about the best course of action for the organization over time. While learning helps improve the organization's goals it also creates a time-consistency problem. Leader resoluteness is a valuable attribute in such a setting, since it slows down the leader's learning and thus improves the credibility of the mission statement. But resolute leaders also inhibit communication with followers and leader resoluteness is costly when followers have sufficiently valuable signals
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Related Identities
- National Bureau of Economic Research
- Rosenthal, Howard 1939- Other Editor
- Arezki, Rabah Author Editor
- Samama, Frederic Other Author Editor
- Stiglitz, Joseph E. Other Editor
- El Aynaoui, Karim Author Editor
- Dewatripont, M. (Mathias)
- Wang, Neng Other
- Scheinkman, José Alexandre Other Author
- Jeanne, Olivier Other Author
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Associated Subjects
Bank loans--Econometric models Bankruptcy Bankruptcy--Econometric models Banks and banking Business enterprises--Finance--Econometric models Business planning Commercial loans Competition Conflict of interests Contracts Contracts--Econometric models Contracts--Economic aspects Corporate governance Corporations Corporations--Finance--Econometric models Credit Credit bureaus Credit control Debt relief Debt relief--Econometric models Debts, External Debts, External--Econometric models Debts, Public Debts, Public--Econometric models Decision making--Econometric models Economics Executives--Decision making Executives--Salaries, etc Executives--Salaries, etc.--Econometric models Financial crises Financial crises--Econometric models Industrial management International finance International Monetary Fund Investments Labor contract Labor market Leadership Loans, Foreign Management Obligations (Law) Poor Relationship banking Right of property Risk management Sovereign wealth funds State bankruptcy Stocks--Prices Tobin's q United States
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Alternative Names
Bolton, P. 1957-
Patrick Bolton, 1957-
Patrick Bolton economist (Columbia University)
Patrick Bolton econoom
Patrick Bolton Wirtschaftswissenschaftler (Barbara and David Zalaznick Professor of Business, Finance and Economics; tätig
am Laboratoire d'Econometrie de l'Ecole Polytechnique, Paris; London School of Economics, ECARE, Univ. Libre de Bruxelles,
CentER, Tilburg...)
Болтон, Патрик, 1957-
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