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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Description/Abstract
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.
| Item Type: | Article |
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| Related URLs: | |
| Subjects: | H Social Sciences > H Social Sciences (General) |
| Divisions: | University Structure - Pre August 2011 > School of Social Sciences > Economics |
| Item ID: | 33438 |
| Date Deposited: | 09 Jan 2008 |
| Last Modified: | 02 Mar 2012 12:05 |
| Contributors: | Mason, R.A. (Author) Swanson, T.M. (Author) |
| Date: | April 1996 |
| Status: | Published |
| URI: | http://eprints.soton.ac.uk/id/eprint/33438 |
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