{"id":"https://openalex.org/W2109380449","doi":"https://doi.org/10.1111/j.1540-6261.1990.tb05105.x","title":"Financial Contracting and Leverage Induced Over- and Under-Investment Incentives","display_name":"Financial Contracting and Leverage Induced Over- and Under-Investment Incentives","publication_year":1990,"publication_date":"1990-07-01","ids":{"openalex":"https://openalex.org/W2109380449","doi":"https://doi.org/10.1111/j.1540-6261.1990.tb05105.x","mag":"2109380449"},"language":"en","primary_location":{"id":"doi:10.1111/j.1540-6261.1990.tb05105.x","doi":"https://doi.org/10.1111/j.1540-6261.1990.tb05105.x","is_oa":false,"landing_page_url":"https://doi.org/10.1111/j.1540-6261.1990.tb05105.x","pdf_url":null,"source":{"id":"https://openalex.org/S5353659","display_name":"The Journal of Finance","issn_l":"0022-1082","issn":["0022-1082","1540-6261"],"is_oa":false,"is_in_doaj":false,"is_core":true,"listed_in":["abdc-a-star","anvur-class-a","anvur-scientific","cwts-core","erih-plus","fnege-1-star","ft50","jufo-3","norway-2","poland-200","russia-white-list-1","utd24","vabb-shw"],"host_organization":"https://openalex.org/P4310320595","host_organization_name":"Wiley","host_organization_lineage":["https://openalex.org/P4310320595"],"host_organization_lineage_names":["Wiley"],"type":"journal"},"license":null,"license_id":null,"version":"publishedVersion","is_accepted":true,"is_published":true,"raw_source_name":"The Journal of Finance","raw_type":"journal-article"},"volume":null,"type":"article","indexed_in":["crossref"],"open_access":{"is_oa":false,"oa_status":"closed","oa_url":null,"any_repository_has_fulltext":false},"authorships":[{"author_position":"first","author":{"id":"https://openalex.org/A5033917265","display_name":"Elazar Berkovitch","orcid":null,"observed_orcids":[]},"institutions":[],"countries":[],"is_corresponding":false,"raw_author_name":"ELAZAR BERKOVITCH","raw_affiliation_strings":[],"raw_orcid":null,"affiliations":[]},{"author_position":"last","author":{"id":"https://openalex.org/A5020856738","display_name":"E. Han Kim","orcid":null,"observed_orcids":[]},"institutions":[{"id":"https://openalex.org/I27837315","display_name":"University of Michigan","ror":"https://ror.org/00jmfr291","country_code":"US","type":"education","lineage":["https://openalex.org/I27837315"]}],"countries":["US"],"is_corresponding":false,"raw_author_name":"E. HAN KIM","raw_affiliation_strings":["Assistant Professor of Finance and Fred M. Taylor Professor of Business Administration and Finance, respectively, at the University of Michigan Graduate School of Business Administration, Ann Arbor. We would like to thank finance workshop participants at Ohio State University and The University of Michigan, especially Steve Buser, Harry DeAngelo, Dan Ebels, Ronen Israel, Rene\u0301 Stulz, and the discussant of our paper, Robert Dammon, for helpful comments and suggestions","Assistant Professor of Finance and Fred M. Taylor Professor of Business Administration and Finance, respectively, at the University of Michigan Graduate School of Business Administration, Ann Arbor. We would like to thank finance workshop participants at Ohio State University and The University of Michigan, especially Steve Buser, Harry DeAngelo, Dan Ebels, Ronen Israel, Ren\u00e9 Stulz, and the discussant of our paper, Robert Dammon, for helpful comments and suggestions"],"raw_orcid":null,"affiliations":[{"raw_affiliation_string":"Assistant Professor of Finance and Fred M. Taylor Professor of Business Administration and Finance, respectively, at the University of Michigan Graduate School of Business Administration, Ann Arbor. We would like to thank finance workshop participants at Ohio State University and The University of Michigan, especially Steve Buser, Harry DeAngelo, Dan Ebels, Ronen Israel, Rene\u0301 Stulz, and the discussant of our paper, Robert Dammon, for helpful comments and suggestions","institution_ids":["https://openalex.org/I27837315"]},{"raw_affiliation_string":"Assistant Professor of Finance and Fred M. Taylor Professor of Business Administration and Finance, respectively, at the University of Michigan Graduate School of Business Administration, Ann Arbor. We would like to thank finance workshop participants at Ohio State University and The University of Michigan, especially Steve Buser, Harry DeAngelo, Dan Ebels, Ronen Israel, Ren\u00e9 Stulz, and the discussant of our paper, Robert Dammon, for helpful comments and suggestions","institution_ids":["https://openalex.org/I27837315"]}]}],"institutions":[],"countries_distinct_count":1,"institutions_distinct_count":1,"corresponding_author_ids":[],"corresponding_institution_ids":[],"apc_list":{"value":4430,"currency":"USD","value_usd":4430},"apc_paid":null,"fwci":13.1955,"has_fulltext":false,"cited_by_count":173,"citation_normalized_percentile":{"value":0.97990945,"is_in_top_1_percent":false,"is_in_top_10_percent":true},"cited_by_percentile_year":{"min":89,"max":99},"biblio":{"volume":"45","issue":"3","first_page":"765","last_page":"765"},"is_retracted":false,"is_paratext":false,"is_xpac":false,"primary_topic":{"id":"https://openalex.org/T10019","display_name":"Corporate Finance and Governance","score":0.98580002784729,"subfield":{"id":"https://openalex.org/subfields/1402","display_name":"Accounting"},"field":{"id":"https://openalex.org/fields/14","display_name":"Business, Management and Accounting"},"domain":{"id":"https://openalex.org/domains/2","display_name":"Social Sciences"}},"topics":[{"id":"https://openalex.org/T10019","display_name":"Corporate Finance and Governance","score":0.98580002784729,"subfield":{"id":"https://openalex.org/subfields/1402","display_name":"Accounting"},"field":{"id":"https://openalex.org/fields/14","display_name":"Business, Management and Accounting"},"domain":{"id":"https://openalex.org/domains/2","display_name":"Social Sciences"}},{"id":"https://openalex.org/T12509","display_name":"Corporate Insolvency and Governance","score":0.004900000058114529,"subfield":{"id":"https://openalex.org/subfields/1402","display_name":"Accounting"},"field":{"id":"https://openalex.org/fields/14","display_name":"Business, Management and Accounting"},"domain":{"id":"https://openalex.org/domains/2","display_name":"Social Sciences"}},{"id":"https://openalex.org/T11976","display_name":"Capital Investment and Risk Analysis","score":0.0038999998942017555,"subfield":{"id":"https://openalex.org/subfields/2003","display_name":"Finance"},"field":{"id":"https://openalex.org/fields/20","display_name":"Economics, Econometrics and Finance"},"domain":{"id":"https://openalex.org/domains/2","display_name":"Social Sciences"}}],"keywords":[{"id":"https://openalex.org/keywords/financial-contracting","display_name":"financial contracting","score":0.6899999976158142},{"id":"https://openalex.org/keywords/financial-leverage","display_name":"leverage","score":0.6869999766349792},{"id":"https://openalex.org/keywords/overinvestment","display_name":"overinvestment","score":0.7850000262260437},{"id":"https://openalex.org/keywords/underinvestment","display_name":"underinvestment","score":0.9869999885559082},{"id":"https://openalex.org/keywords/seniority-rules","display_name":"seniority rules","score":0.843999981880188},{"id":"https://openalex.org/keywords/risky-debt","display_name":"risky debt","score":0.7680000066757202},{"id":"https://openalex.org/keywords/project-finance","display_name":"project financing","score":0.8960000276565552},{"id":"https://openalex.org/keywords/information-asymmetry","display_name":"information asymmetry","score":0.7549999952316284},{"id":"https://openalex.org/keywords/default-risk","display_name":"default risk","score":0.45100000500679016},{"id":"https://openalex.org/keywords/investment-incentives","display_name":"investment incentives","score":0.5139999985694885}],"concepts":[{"id":"https://openalex.org/C120527767","wikidata":"https://www.wikidata.org/wiki/Q3196867","display_name":"Debt","level":2,"score":0.6743621826171875},{"id":"https://openalex.org/C2780783599","wikidata":"https://www.wikidata.org/wiki/Q1931779","display_name":"Seniority","level":2,"score":0.6742830276489258},{"id":"https://openalex.org/C29122968","wikidata":"https://www.wikidata.org/wiki/Q1414816","display_name":"Incentive","level":2,"score":0.5812965631484985},{"id":"https://openalex.org/C116168712","wikidata":"https://www.wikidata.org/wiki/Q181201","display_name":"Dividend","level":2,"score":0.5748856663703918},{"id":"https://openalex.org/C153083717","wikidata":"https://www.wikidata.org/wiki/Q6535263","display_name":"Leverage (statistics)","level":2,"score":0.5378690361976624},{"id":"https://openalex.org/C163428354","wikidata":"https://www.wikidata.org/wiki/Q1047513","display_name":"Cash flow","level":2,"score":0.5264732837677002},{"id":"https://openalex.org/C162324750","wikidata":"https://www.wikidata.org/wiki/Q8134","display_name":"Economics","level":0,"score":0.5252187848091125},{"id":"https://openalex.org/C556758197","wikidata":"https://www.wikidata.org/wiki/Q580018","display_name":"Monetary economics","level":1,"score":0.4803703725337982},{"id":"https://openalex.org/C27548731","wikidata":"https://www.wikidata.org/wiki/Q88272","display_name":"Investment (military)","level":3,"score":0.4713178277015686},{"id":"https://openalex.org/C10138342","wikidata":"https://www.wikidata.org/wiki/Q43015","display_name":"Finance","level":1,"score":0.43058666586875916},{"id":"https://openalex.org/C144133560","wikidata":"https://www.wikidata.org/wiki/Q4830453","display_name":"Business","level":0,"score":0.3582383990287781},{"id":"https://openalex.org/C175444787","wikidata":"https://www.wikidata.org/wiki/Q39072","display_name":"Microeconomics","level":1,"score":0.32647019624710083},{"id":"https://openalex.org/C41008148","wikidata":"https://www.wikidata.org/wiki/Q21198","display_name":"Computer science","level":0,"score":0.0},{"id":"https://openalex.org/C94625758","wikidata":"https://www.wikidata.org/wiki/Q7163","display_name":"Politics","level":2,"score":0.0},{"id":"https://openalex.org/C17744445","wikidata":"https://www.wikidata.org/wiki/Q36442","display_name":"Political science","level":0,"score":0.0},{"id":"https://openalex.org/C119857082","wikidata":"https://www.wikidata.org/wiki/Q2539","display_name":"Machine learning","level":1,"score":0.0},{"id":"https://openalex.org/C199539241","wikidata":"https://www.wikidata.org/wiki/Q7748","display_name":"Law","level":1,"score":0.0}],"mesh":[],"locations_count":3,"locations":[{"id":"doi:10.1111/j.1540-6261.1990.tb05105.x","doi":"https://doi.org/10.1111/j.1540-6261.1990.tb05105.x","is_oa":false,"landing_page_url":"https://doi.org/10.1111/j.1540-6261.1990.tb05105.x","pdf_url":null,"source":{"id":"https://openalex.org/S5353659","display_name":"The Journal of Finance","issn_l":"0022-1082","issn":["0022-1082","1540-6261"],"is_oa":false,"is_in_doaj":false,"is_core":true,"listed_in":["abdc-a-star","anvur-class-a","anvur-scientific","cwts-core","erih-plus","fnege-1-star","ft50","jufo-3","norway-2","poland-200","russia-white-list-1","utd24","vabb-shw"],"host_organization":"https://openalex.org/P4310320595","host_organization_name":"Wiley","host_organization_lineage":["https://openalex.org/P4310320595"],"host_organization_lineage_names":["Wiley"],"type":"journal"},"license":null,"license_id":null,"version":"publishedVersion","is_accepted":true,"is_published":true,"raw_source_name":"The Journal of Finance","raw_type":"journal-article"},{"id":"doi:10.2307/2328792","doi":"https://doi.org/10.2307/2328792","is_oa":false,"landing_page_url":"https://doi.org/10.2307/2328792","pdf_url":null,"source":{"id":"https://openalex.org/S5353659","display_name":"The Journal of Finance","issn_l":"0022-1082","issn":["0022-1082","1540-6261"],"is_oa":false,"is_in_doaj":false,"is_core":true,"listed_in":["abdc-a-star","anvur-class-a","anvur-scientific","cwts-core","erih-plus","fnege-1-star","ft50","jufo-3","norway-2","poland-200","russia-white-list-1","utd24","vabb-shw"],"host_organization":"https://openalex.org/P4310320595","host_organization_name":"Wiley","host_organization_lineage":["https://openalex.org/P4310320595"],"host_organization_lineage_names":["Wiley"],"type":"journal"},"license":null,"license_id":null,"version":"publishedVersion","is_accepted":true,"is_published":true,"raw_source_name":"The Journal of Finance","raw_type":"journal-article"},{"id":"pmh:oai:RePEc:bla:jfinan:v:45:y:1990:i:3:p:765-94","doi":null,"is_oa":false,"landing_page_url":"http://links.jstor.org/sici?sici=0022-1082%28199007%2945%3A3%3C765%3AFCALIO%3E2.0.CO%3B2-3&origin=repec","pdf_url":null,"source":{"id":"https://openalex.org/S4306401271","display_name":"RePEc: Research Papers in Economics","issn_l":null,"issn":null,"is_oa":false,"is_in_doaj":false,"is_core":false,"listed_in":[],"host_organization":"https://openalex.org/I77793887","host_organization_name":"Federal Reserve Bank of St. Louis","host_organization_lineage":["https://openalex.org/I77793887"],"host_organization_lineage_names":[],"type":"repository"},"license":null,"license_id":null,"version":"submittedVersion","is_accepted":false,"is_published":false,"raw_source_name":null,"raw_type":"article"}],"best_oa_location":null,"sustainable_development_goals":[],"sustainable_development_goals_aurora":[{"id":"https://metadata.un.org/sdg/17","display_name":"Partnerships for the goals","score":0.5299999713897705}],"study_designs":[],"awards":[],"funders":[],"has_content":{"grobid_xml":false,"pdf":false},"content_urls":null,"referenced_works_count":21,"referenced_works":["https://openalex.org/W1555406996","https://openalex.org/W1579112106","https://openalex.org/W1991384670","https://openalex.org/W1993093318","https://openalex.org/W2000578291","https://openalex.org/W2004147714","https://openalex.org/W2008595327","https://openalex.org/W2048534553","https://openalex.org/W2068505366","https://openalex.org/W2074928461","https://openalex.org/W2075911810","https://openalex.org/W2081281397","https://openalex.org/W2107524339","https://openalex.org/W2124597406","https://openalex.org/W2140041112","https://openalex.org/W2160184254","https://openalex.org/W2161960891","https://openalex.org/W2752617332","https://openalex.org/W3124114405","https://openalex.org/W3124284666","https://openalex.org/W4237698691"],"related_works":["https://openalex.org/W1601976336","https://openalex.org/W2047471051","https://openalex.org/W1537441109","https://openalex.org/W2133887811","https://openalex.org/W2010481072","https://openalex.org/W1969099089","https://openalex.org/W2267976505","https://openalex.org/W2510442890","https://openalex.org/W2042906191","https://openalex.org/W2140281938"],"abstract_inverted_index":{"ABSTRACT":[0],"This":[1],"paper":[2],"investigates":[3],"the":[4,14,32,45,71,77,84,88,94,102,114,159,167,172],"effects":[5],"of":[6,28,34,110],"seniority":[7,27,47,104,124],"rules":[8],"and":[9,16,39,122,170],"restrictive":[10],"dividend":[11,132,144],"convenants":[12],"on":[13,56,140,148],"over\u2010":[15],"under\u2010investment":[17,35,160],"incentives":[18],"associated":[19],"with":[20],"risky":[21],"debt.":[22],"We":[23],"show":[24,135],"that":[25,136],"increasing":[26],"new":[29,52,58,81,89,111],"debt":[30,73,112],"decreases":[31],"incidence":[33],"but":[36],"increases":[37,158],"over\u2010investment,":[38],"vice":[40],"versa.":[41],"Under":[42,68],"symmetric":[43],"information,":[44,70],"optimal":[46,72,103],"rule":[48,105],"is":[49,99,120,127],"to":[50,62,80,87,131],"give":[51],"debtholders":[53,82],"first":[54],"claim":[55],"a":[57],"project":[59,66],"without":[60],"recourse":[61],"existing":[63],"assets":[64],"(i.e.,":[65],"financing).":[67],"asymmetric":[69],"contract":[74],"requires":[75],"equating":[76],"expected":[78,115],"return":[79],"in":[83,93,118],"default":[85,119],"state":[86],"project's":[90],"cash":[91,116],"flow":[92,117],"same":[95],"rate.":[96],"If":[97],"this":[98],"not":[100,143],"possible,":[101],"calls":[106],"for":[107],"strict":[108],"subordination":[109],"if":[113,125],"small":[121],"full":[123],"it":[126],"large.":[128],"With":[129],"regard":[130],"convenants,":[133],"we":[134],"their":[137],"effect":[138],"depends":[139],"whether":[141],"or":[142],"payments":[145],"are":[146,153],"conditioned":[147],"future":[149],"investments.":[150],"When":[151],"they":[152],"unconditioned,":[154],"allowing":[155],"more":[156],"dividends":[157,165],"incentive.":[161,174],"In":[162],"contrast,":[163],"conditional":[164],"decrease":[166],"underinvestment":[168],"incentive":[169],"increase":[171],"over\u2010investment":[173]},"counts_by_year":[{"year":2026,"cited_by_count":1},{"year":2025,"cited_by_count":3},{"year":2024,"cited_by_count":3},{"year":2023,"cited_by_count":4},{"year":2022,"cited_by_count":1},{"year":2021,"cited_by_count":4},{"year":2020,"cited_by_count":5},{"year":2019,"cited_by_count":6},{"year":2018,"cited_by_count":3},{"year":2017,"cited_by_count":7},{"year":2016,"cited_by_count":8},{"year":2015,"cited_by_count":4},{"year":2014,"cited_by_count":4},{"year":2013,"cited_by_count":7},{"year":2012,"cited_by_count":5}],"updated_date":"2026-10-12T09:40:04.860316","created_date":"2016-06-24T00:00:00"}
