Marina Albanese

Le difficoltà di finanziamento delle labour managed firms e il razionamento del credito

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The financial constraint in raising capital is the main obstacle to the diffusion of Labour managed firms (LMFs). In this kind of firms the separation of ownership and control creates problems that go beyond the guaranteeing of creditors and the cost of debt is very high. In the paper, we demonstrate that allowing for self-financing, obtained by bonds, LMFs obtain the necessary initial capital and reduce their debt to equity ratio, thus reducing the cost of external financing too. If one allows for this solution and bonds obtained by partners for self-financing are used as collateral for capital borrowed by banks, the moral hazard in the LMF is less sizeable than in a joint-stock company (defined in this paper as CMF) and credit rationing too. This result depends on the form of the utility function of LMF members, which differs from the CMF shareholders' utility function, since it includes income stability and co-operation, which hinder the undertaking of risky projects.

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