風(fēng)險資產(chǎn)重組下的保險，債券合約，以及投資不足或過度投資【外文翻譯】

1、本科畢業(yè)論文（設(shè)計）外 文 翻 譯原文： 原文：Insurance,bond covenants,and under- or over- investment with risky asset reconstitution AbstractTraditional theory predicts that the shareholders of a limited liability company financed partly

2、by bonds may underinvest by not replacing damaged company assets. It also precludes the possibility of overinvestment. By relaxing the restrictive assumption maintained under traditional theory, namely, that the effects

3、of reconstituting damaged assets are nonstochastic, this article shows that both over and underinvestment are possible. It is shown that these moral hazard problems can be mitigated by incorporating appropriate insurance

4、 requirements into bond covenants. Moreover, it is shown that the insurance requirements for alleviating underinvestment and overinvestment are quite different. Particularly, for underinvestment, the required insurance o

5、nly needs to make the bonds riskless in the best asset reconstitution states of the loss states in which the company value falls short of the promised bond repayment; however, for overinvestment, the required insurance s

6、hould make the bonds totally riskless. The difference in insurance requirements is especially important when insurance is actuarially unfavorable such that morethan-required insurance is always undesirable.IntroductionIt

7、 is well known in the finance and economics literature that the presence of asymmetric information between stockholders and bondholders may lead to suboptimal corporate investment decisions. Two common examples are the a

8、sset substitution problem and the underinvestment problem introduced by Jensen and Meckling (1976) and Myers (1977). The seminal article of Mayers and Smith (1987) (which are likely to be insufficient in the case of larg

9、e property damage), the liquidity needed for asset reconstitution often has to be extracted from other important operations or production activities. With large property damage, asset reconstitution may use up a signific

10、ant portion of prearranged credit or buffer cash initially planned for coping with other production and market shocks, introducing additional risk to the value of a company. Possible liquidity problems may have significa

11、ntly negative impact on company value. Therefore, asset reconstitution can be risky, possibly resulting in positive or negative net present values in different states of nature. Moreover, the expected net present value o

12、f asset reconstitution can be positive or negative.This article shows that both over and underinvestment problems may arise when asset reconstitution is risky.With risky asset reconstitution, given a certain level of ass

13、et damage, shareholders may not choose to reconstitute damaged assets even though doing so generates a positive expected net present value, giving rise to the underinvestment problem. This happens when the value of a com

14、pany falls short of the promised bond repayment amount even in the best asset reconstitution states. In this case, asset reconstitution will only benefit bondholders, but not shareholders who arealready protected by the

15、limited liability provision. The underinvestment problem will not arise in the absence of limited liability because a rise in company value due to asset reconstitution will relieve some shareholders’ debt responsibilitie

16、s. It also will not arise whenever company value exceeds the promised bond repayment amount in some asset reconstitution states, because asset reconstitution raises shareholders’ wealth in these states.On the contrary, g

17、iven a certain level of asset damage, shareholders may opt for risky asset reconstitution with a negative expected net present value, giving rise to the overinvestment problem. This happens when the value of a company is

18、 higher than the bond repayment amount in some, but not all, asset reconstitution states. Shareholders, who are protected by the limited liability provision, will engage in risky asset reconstitution to raise their own w