A Unified Model of Firm Dynamics with Limited Commitment and Assortative Matching

• 成果类型: Article
• 署名作者: Ai, Hengjie; Kiku, Dana; Li, Rui; Tong, Jincheng
• 署名单位: University of Minnesota System; University of Minnesota Twin Cities; University of Illinois System; University of Illinois Urbana-Champaign; University of Massachusetts System; University of Massachusetts Boston; University of Toronto
• 刊物名称: JOURNAL OF FINANCE
• ISSN/ISSBN: 0022-1082
• DOI: 10.1111/jofi.12980
• 发表日期: 2021
• 页码: 317-356
• 关键词: optimal lending contracts; time; RISK; INVESTMENT; COMPENSATION; constraints; GROWTH

摘要

We develop a unified theory of dynamic contracting and assortative matching to explain firm dynamics. In our model, neither firms nor managers can commit to arrangements that yield lower payoffs than their outside options, which are microfounded by the equilibrium conditions in a matching market. The model endogenously generates power laws in firm size and CEO compensation, and explains differences in their right tails. We also show that our model quantitatively accounts for many salient features of the time-series dynamics and the cross-sectional distribution of firm investment, dividend payout, and CEO compensation.