Three Essays in Finance

Pablo Hector Seuanez Salgado.

08/02/2013

Orientador: Vinicius Nascimento Carrasco.

Co-orientador: João Manoel Pinho de Mello.

Banca: Carlos Viana de Carvalho. Gustavo Manso. Ilan Goldfajn. Braz Ministerio de Camargo. Gabriel de Abreu Madeira.

http://www2.dbd.puc-rio.br/pergamum/biblioteca/php/mostrateses.php?open=1&arqtese=0912871_2013_Indice.html

Nível: Doutorado

This thesis is comprised of three chapters. The first chapter explores the effect of product market structure on the liquidation value of industry assets. I show that the contest for the gains arising from market concentration among firms with financial constraints leads to their expending of insufficient efforts to redeploy assets across industries and to significant liquidation discounts when compared to an efficient benchmark. Equilibrium distress costs and private costs of leverage should increase with the rents linked to market concentration in the product market. In the second chapter of the thesis, I explore the implications of delegating to a unique agent the task of financial intermediation. I show that financial intermediation in a costly state verification model has a cost not yet analyzed: it allows for the existence of multiple equilibria, some of which are characterized by borrowers defaulting on their loans because they expect other borrowers to do the same (i.e. bad equilibria arise due to strategic complementarities in entrepreneurs' actions). We propose two mechanisms that fully implement the desired equilibrium allocation. Finally, in the third chapter of the thesis I analyze a continuous time principal-agent model where a risk-neutral agent protected by limited liability is hired to perform multiple tasks. In this setting, I show that economies of scope naturally emerge as combining multiple tasks into a unique job relaxes the agent's limited-liability constraint. The analysis has several implications for job design i.e. the optimal grouping of several tasks into a unique job.

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