Contract Design for Problem Asset Disposition
作者:
Larry Benveniste,
Dennis R. Capozza,
Roger Kormendi,
William Wilhelm,
期刊:
Real Estate Economics
(WILEY Available online 1994)
卷期:
Volume 22,
issue 1
页码: 149-167
ISSN:1080-8620
年代: 1994
DOI:10.1111/1540-6229.00630
出版商: Blackwell Publishing Ltd
数据来源: WILEY
摘要:
As a result of declining real estate values and the receivership of numerous financial institutions, government regulators like the Resolution Trust Corporation (RTC) and Federal Deposit Insurance Corporation (FDIC) have large inventories of distressed assets. This paper develops a model of the principal/agent issues associated with management and disposition of problem assets. In the model, optimal contracts balance risk sharing with incentives for effort. We argue that the RTC will minimize the ultimate cost of the thrift crisis by placing managerial control of distressed assets in the private sector, while retaining full or partial ownership of the assets for risk‐sharing purposes. Recoveries are maximized, however, only when an asset manager is incented to expend a first‐best level of effort by indexing asset management and disposition contracts to market moveme
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