Synopsis
Excerpt from Agency Problems, Financial Contracting, and Predation
We conclude these introductory remarks by contrasting our paper to three related literatures. The first is the recent game-theoretic work on predation.4 This literature shares with ours the feature that predation is rational. It differs, however, in that predation is viewed as an attempt to convince rivals that it would be unprofitable to remain in the industry; predation changes rivals' beliefs about industry demand or the predator's costs. In our paper, there is common knowledge that production in each period is a positive net present value investment.5 Thus, predation does not work by changing rivals' beliefs. Rather, predation adversely affects the agency relationship between the firm and its creditors.
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About the Author
Patrick Bolton is John H. Scully Professor of Finance at Princeton University and managing editor of "The Journal of the European Economic Association".
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Agency Problems, Financial Contracting, and Predation (Classic Reprint)
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Paperback. Condition: New. Print on Demand. This book explores the relationship between company finances and competition, proposing that common business practices may increase susceptibility to predatory behaviour. The author presents a new theory, known as 'predation theory'. This theory states that when a company secures its financial position through external sources, it is more likely to face predatory practices from competitors. The author argues that accessing external investment to offset operational costs, such as through venture capital or loans, creates a risk of 'predation' by rivals. This method of financing often requires adherence to strict performance targets and may force companies to accept unfavourable terms. As a result, competitors may deliberately take actions that reduce the company's profit margins, ultimately forcing it out of the market. The author also considers the concept of 'deep pockets' - when companies have ample financial resources - and argues that this can also lead to increased predation. The book contends that the common practice of using external financing to cover upfront costs could lead to a higher probability of underhanded tactics from competitors. It presents a sophisticated analysis of the interaction between financial strategy and aggressive market behaviour, highlighting the nuances and complexities present in the corporate world. The book's insights contribute to our understanding of business dynamics and the interplay between financial decisions and competitive advantage. This book is a reproduction of an important historical work, digitally reconstructed using state-of-the-art technology to preserve the original format. In rare cases, an imperfection in the original, such as a blemish or missing page, may be replicated in the book. print-on-demand item. Seller Inventory # 9781332248551_0
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Agency Problems, Financial Contracting, and Predation Classic Reprint
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PAP. Condition: New. New Book. Shipped from UK. Established seller since 2000. Seller Inventory # LW-9781332248551
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Agency Problems, Financial Contracting, and Predation Classic Reprint
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Agency Problems, Financial Contracting, and Predation (Classic Reprint)
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Condition: Sehr gut. Zustand: Sehr gut | Sprache: Englisch | Produktart: Bücher. Seller Inventory # 26074994/2