Library of the University of Amsterdam (Potgieterzaal C0.01). Title: "Contracting between Firms: Empirical Evidence".
|Date||3 December 2012|
|Room||Library of the University of Amsterdam - Potgieterzaal C0.01|
We study how economic problems that arise between suppliers and buyers affect the types of contracts they write. We analyse 185 contracts signed between a buyer and 89 suppliers to test how expectations about agency, hold-up, and contractibility problems shape contract design. We find that contract clauses that address agency problems through monitoring or incentives are more likely if a supplier’s products are more important to the buyer. We then show that both the buyer and the suppliers seek for more contractual protection if their hold-up concerns are larger. We find that provisions that rely on verifiability (e.g., incentive provisions) are more likely if the products underlying a contract are more contractible. Over time, contracts signed with the same supplier become stricter, which is driven by an increased number of monitoring provisions. Finally, we show that monitoring and incentive provisions are complements, addressing different aspects of agency problems. Our data allows us to address concerns about the endogeneity of product characteristics, and we are able to study how contract design and product pricing are related.
(The paper will not be posted online, but will be distributed at the seminar)
Dr. Zacharias Sautner is Associate Professor of Finance at the University of Amsterdam. His research focuses on corporate governance, internal capital markets, financial distress, and finance and law. He has published in leading international finance journals such as The Journal of Finance, The Review of Financial Studies, or The Review of Finance. Zacharias was at the University of Oxford and the University of Mannheim before coming to Amsterdam. He has been visiting fellow at the Shanghai Advanced Institute of Finance, Shanghai Jiaotong University, and the Australian School of Business, University of New South Wales. He is the Winner of the Van der Schroeff Award 2011 for the Best Lecturer of the Faculty of Economics and Business at the University of Amsterdam. At Duisenberg school of finance, Zacharias serves as Programme Director for the MSc Finance – Corporate Finance and Banking track. Read more about Dr. Zacharias Sautner.