Long-term liability and the choice of liquidation
Mason, R.A. and Swanson, T.M. (1996) Long-term liability and the choice of liquidation. Geneva Papers on Risk and Insurance, 79, (4), 204-223.
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This paper argues that the combination of limited liability, the productive characteristics of many polluting industries, and the long-term nature of certain environmental damages, presents shareholders of limited liability corporations with an incentive to liquidate their firm before large future liabilities are realised. A formal model is developed, and then parameterised, to indicate the types of firms that will engage in this (and other) behaviour; concrete examples of each type are given. The policy implications are explored, concentrating on the need for separate, ex ante regulation to address the distinct problem of strategic liquidation.
|Subjects:||H Social Sciences > H Social Sciences (General)|
|Divisions:||University Structure - Pre August 2011 > School of Social Sciences > Economics
|Date Deposited:||09 Jan 2008|
|Last Modified:||02 Mar 2012 12:05|
|Contributors:||Mason, R.A. (Author)
Swanson, T.M. (Author)
|RDF:||RDF+N-Triples, RDF+N3, RDF+XML, Browse.|
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