Financing Capacity with Stealing and Shirking
研究企业在需求不确定且需外部融资时，如何通过最优债务合约来平衡资金挪用和偷懒两种治理问题，并发现这两种问题对产能投资的影响会因严重程度不同而反转。
We study a firm’s capacity choice under demand uncertainty given that it must finance this investment externally. Sharing profits with investors causes governance problems affecting both capacity and demand: the firm may “steal” capital, which reduces effective capacity, and “shirk” on market development, which reduces demand. We adopt an optimal contracting approach whereby the firm optimizes among feasible financial claims derived endogenously. We characterize its optimal financing and capacity choices. First, debt financing is optimal: it minimizes the incentives to both divert and shirk. Second, the firm underinvests (overinvests) if the effort problem is mild (severe) enough relative to the diversion problem. Thus, a worsening of the same governance problem can lead to over- or underinvestment depending on circumstances. Third, we find that the diversion and shirking problems interact in their impact on capacity investment. In particular, if the shirking problem is mild enough, the more severe the diversion problem, the less the firm invests. However, if the shirking problem is severe enough, the effect of diversion is reversed: the more severe the diversion problem, the more the firm invests. This paper was accepted by Charles Corbett, operations management.