We aim at obtaining a simple quantitative rule for the joint determining of optimal corporate investment and financing policies in an intertemporal setting. A novel general continuous-time framework, inspired by the optimal portfolio design literature, is first built. We derive the optimal...

This paper derives continuous-time conditions for a manager compensated with a call option to increase risk-taking. We show that the principles proposed by Ross (2004) in a one-period environment remain valid in continuous time

This paper develops a general continuous-time framework for defining the optimal corporate pension policy for defined benefit (DB) plans in the presence of PBGC insurance. Interactions between the firm's optimal investment and financing policies and the optimal portfolio strategy for DB plans...

This paper studies the surplus-sharing effects on the risk-taking of a corporate defined benefit (DB) pension plan. The focus is on the influence of the participants' proportion of surplus and of the relative weight of equityholders to participants. We prove that participants' risk-taking...