Optimal Property Rights in Financial Contracting

Ayotte, Kenneth and Bolton, Patrick (2011) Optimal Property Rights in Financial Contracting. Review of Financial Studies, 24 (10). pp. 3401-3433.

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Official URL: http://tse-fr.eu/pub/26386

Abstract

This article adopts a definition of property rights from legal scholarship: A property right (in contrast to a contractual right) is enforceable, not only against the parties to a contract, but also against third parties outside the contract. In a financial contracting setting, we ask: When should the law enforce a lender's contractual protections as property rights, given that these rights may be hidden and costly for other lenders to discover? Our model explains why the law limits the creation and enforceability of property rights, and develops principles of optimal enforceability. These principles are often reflected in the law.

Item Type: Article
Language: English
Date: 2011
Refereed: Yes
JEL codes: K11 - Property Law
K12 - Contract Law
G32 - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure
G33 - Bankruptcy; Liquidation
Subjects: B- ECONOMIE ET FINANCE
Divisions: TSE-R (Toulouse)
Site: UT1
Date Deposited: 09 Jul 2014 17:30
Last Modified: 07 Mar 2018 13:22
OAI ID: oai:tse-fr.eu:26386
URI: http://publications.ut-capitole.fr/id/eprint/15415

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