Essays on the financial governance of firms

Four essays, or chapters, model the capital structure, governance, and investment decisions as part of a sequential game. Each chapter is separate in its context, assumptions, and conclusions. The titles of the chapters are below.Abstracts of each essay or chapter can be found at the beginning of each chapter. Thetitles of the chapters or essays are as follows: I. Managerial Ownership with Rent-Seeking Employees, II. Financing Professional Partnerships,III. Sunk Cost Efficiency with Identical Competitors, and IV. Business Stealing and Bankruptcy. With the exception of Chapter III, which is meant to complement Chapter IV,these essays argue that the structure of financial contracts can affect the real behaviorof firms. The first chapter argues that financial governance policies affect thebehavior of rank-and-file employees. In Chapter II, the governance and capitalstructure of professional service firms affects clients’ expectations of the firm’squality. In Chapter IV, the enforcement of financial contracts by bankruptcy courtsaffects the number of firms that enter and exit the industry.