风险资产重组下的保险，债券合约，以及投资不足或过度投资.docVIP

本科毕业论文（设计） 外 文 翻 译 原文： Insurance,bond covenants,and under- or over- investment with risky asset reconstitution Abstract Traditional theory predicts that the shareholders of a limited liability company financed partly by bonds may underinvest by not replacing damaged company assets. It also precludes the possibility of overinvestment. By relaxing the restrictive assumption maintained under traditional theory, namely, that the effects of reconstituting damaged assets are nonstochastic, this article shows that both over and underinvestment are possible. It is shown that these moral hazard problems can be mitigated by incorporating appropriate insurance requirements into bond covenants. Moreover, it is shown that the insurance requirements for alleviating underinvestment and overinvestment are quite different. Particularly, for underinvestment, the required insurance only needs to make the bonds riskless in the best asset reconstitution states of the loss states in which the company value falls short of the promised bond repayment; however, for overinvestment, the required insurance should make the bonds totally riskless. The difference in insurance requirements is especially important when insurance is actuarially unfavorable such that morethan-required insurance is always undesirable. Introduction It is well known in the finance and economics literature that the presence of asymmetric information between stockholders and bondholders may lead to suboptimal corporate investment decisions. Two common examples are the asset substitution problem and the underinvestment problem introduced by Jensen and Meckling (1976) and Myers (1977). The seminal article of Mayers and Smith (1987) shows that theunderinvestment problem may also occur in the case of reconstitution of damaged corporate assets. Risk-neutral shareholders, who have no precommitment to reconstituting damaged corporate assets, may choose not to replace lost assets in the states of nature in which the value of