Noe, Thomas H.; Rebello, Michael J.; Rietz, Thomas A. - In: Management Science 58 (2012) 11, pp. 2019-2036
We model the effect of external financing on a firm's ability to maintain a reputation for high-quality production. Producing high quality is first best. Defecting to low quality is tempting because it lowers current costs while revenue remains unchanged because consumers and outside investors...