CASAMATTA Catherine

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Blockchains are distributed ledgers, operated within peer-to-peer networks. We model the proof-of-work blockchain protocol as a stochastic game and analyze the equilibrium strategies of rational, strategic miners. Mining the longest chain is a Markov perfect equilibrium, without forking, in line with Nakamoto (2008). The blockchain protocol, however, is a coordination game, with multiple equilibria. There exist equilibria with forks, leading to orphaned blocks and persistent divergence between chains. We also show how forks can be generated by information delays and software upgrades. Last we identify negative externalities implying that equilibrium investment in computing capacity is excessive.

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We study capital markets in which investors compete by designing financial contracts to control an entrepreneur’s ability to side trade and default on multiple loans. We show that covenants may have anticompetitive effects: in particular, they prevent investors from providing additional funds and reduce the entrepreneur’s investment capacity. As a result, a large number of inefficient allocations is supported at equilibrium. We propose a subsidy mechanism similar to guarantee funds in financial markets that efficiently controls the entrepreneur’s side trading and sustains the competitive allocation as the unique equilibrium one.

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We study a credit market in which multiple lenders sequentially offer financing to a single borrower under moral hazard. We show that restricting lenders to post single offers involves a loss of generality: none of the equilibrium outcomes arising in this scenario survives if lenders offer menus of contracts. This result challenges the approach followed in standard models of multiple lending. From a theoretical perspective, we offer new insights on equilibrium robustness in sequential common agency games.

According to the stakeholder theory, Corporate Social Responsibility (CSR) is the answer given by companies to the increasing pressure from employees, shareholders, local communities, environmental NGOs or regulators to take into account the environmental and social impacts of their activities. The challenge is not simply to compensate for negative externalities but to transform companies to allow for sustainable growth. Thus, CSR pushes companies to be proactive and to exceed regulatory expectations. However, how to reconcile such different and even opposing objectives? As more and more companies integrate CSR into their strategies, governance processes seem to be the missing link in bringing together economic, social and environmental performance. This thesis presents empirical and theoretical arguments for the impact of governance at its highest level, from the board of directors to the CEO. After an introductory chapter, Chapter 2 analyzes the link between board composition and the integration of CSR into corporate strategy. It is based on a law on the representation of women on boards of directors. Adopted in France in 2011, this law has led to the appointment of new directors, most of whom are younger than their predecessors. However, this chapter shows that the increase in diversity on boards is not correlated with changes in financial and non-financial performance. This chapter is based on a study of SBF 120 companies from 2009 to 2015. However, while the characteristics of the directors are involved in the decision-making process, the implementation of strategies and the management of the company is entrusted to the CEO. Through a remuneration system with a variable component, the board of directors strives to align the interests of the CEO with its own. Chapter 3 examines the effectiveness of variable remuneration based on environmental or societal criteria. It shows that the impact of these "CSR bonuses" depends on the company's governance model. For companies with a shareholder governance model, CSR bonuses seem to have only a negative impact on financial performance. On the other hand, for companies of the partnership type, these bonuses effectively improve extra-financial performance without reducing financial performance. This empirical study is based on a global panel of 3500 companies over the period 2006-2015. Chapter 4 proposes a theoretical model to analyze the impact of the intrinsic or extrinsic nature of incentives. Based on the principal-agent model developed by Che and Yoo (2001), this chapter analyzes different incentives for a company composed of two agents working on a CSR task. Three scenarios are studied: both agents receive financial compensation, both agents are intrinsically motivated, one agent is intrinsically motivated and the other financially motivated. The model shows that the optimal scenario for the principal depends on the level of intrinsic motivation but also on the interdependence between the two agents' decisions. In the particular case of the remuneration of company directors, the empirical evidence shows that including CSR criteria in the remuneration is more adapted to companies with a high decisional interdependence. The conclusion traces the link between governance and CSR at several levels, and discusses the implication of networks and mimicry effects between firms.

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This manuscript presents three separate chapters covering topics related to the functioning and role of boards of directors. The first chapter investigates the effect of recognition of director expertise on firm growth opportunities, using prestige awards earned by directors. The results indicate that the presence of award-winning directors on boards leads to better investment opportunities. The second chapter analyzes the impact of the quota of women on boards of directors in France on the stock market value of companies. Prior to the quota, investors reacted positively to announcements of female board members, particularly for male-dominated boards. The announcement of the enactment of the law on January 27, 2011 is seen as good news on the stock market, leading investors to anticipate the recruitment of women resulting from the quota. The third chapter discusses the impact of the quota on the labor market for directors. The results indicate that the quota has changed board recruitment practices and, as a result, has improved the stability of company-director matches.

This thesis studies the impact of the reputation of rating agencies on investors' perception of their announcements, as well as on their own behavior to disclose accurate and timely information. It consists of four chapters. In the first and second chapters, we study how investors' perceptions of CRA ratings change following the observation of a rating error. The results show that investors react little or not at all to announcement changes after observing erroneous ratings, suggesting that the poor performance of rating agencies negatively affects their reputation. In the third and fourth chapters, we study the determinants of the timeliness and accuracy of financial rating announcements. We find that the reputation of the rating agency affects the quality of the ratings. In particular, the higher the reputation, the more overpriced and untimely the rating appears.

Despite significant advantages, debt as a source of financing involves the risk of insolvency. Bankruptcy and liquidation of assets come at a high cost not only to the borrower and the lender, but also to society at large. The distress of firms can spread through the economy and cause contagion, and can also involve negative externalities (such as the fall in the price of liquidated assets). Debt renegotiation thus emerges as an alternative to bankruptcy/liquidation, a solution that can be beneficial for all parties involved and for the company. This thesis proposes a theoretical analysis of debt renegotiation in two particular contexts. The first concerns the case of corporate debt. The second concerns the case of mortgage loans. To the best of our knowledge, all models in the literature on corporate debt imply or allow for an infinite number of debt renegotiations. This feature prevents the analysis of the optimal number of renegotiations. To overcome this drawback, we introduce fixed renegotiation costs in a structural model of multiple renegotiations. We analyze the optimal coupon reduction, the timing and the number of renegotiations. With respect to mortgage renegotiation, we contribute to the debate on the current foreclosure crisis by studying first the decision of a lender to renegotiate or foreclose, and second the negative impact of foreclosure on house prices. Finally, the role of credit securitization in decisions to foreclose or renegotiate delinquent debt, as well as the contracts of property managers, are analyzed.

We study the optimal negotiation strategy of an entrepreneur who faces two investors with pri-vate information about his project’s profitability. The entrepreneur derives a private benefit ofcontrol so that he cares not only about expected monetary profits, but also about the probabilityto obtain financing. If he contacts both venture capitalists simultaneously, the entrepreneur ob-tains high expected monetary profits. If he commits to a period of exclusive negotiation with oneventure capitalist, he can increase the probability to obtain financing for riskier projects, but dealterms deteriorate. The optimal negotiation strategy results from this trade-off. We also solve forthe equilibrium financial contracts and obtain implications for venture capitalists’ portfolios andentrepreneurs’ deals. The model predicts in particular that venture capitalists are more likely tofinance projects with equity-like claims when projects are riskier and venture capitalists are moreexperienced. Also, high private benefit entrepreneurs are more likely to receive a single offer andto be financed by less experienced venture capitalists.

We study the fund-raising strategy of an entrepreneur when investors have private information about his project’s profitability. The entrepreneur cares about monetary profits and about the probability to obtain financing. If he contacts both venture capitalists (VCs) simultaneously, he obtains high monetary profits. If he commits to a period of exclusive negotiation with one VC, he increases the probability to obtain financing but deal terms deteriorate. The optimal negotiation strategy results from this tradeoff. We also solve for the equilibrium financial contracts and obtain implications for VCs’ portfolios and entrepreneurs’ deals.

This thesis analyzes the sources of inefficiency that can generate systemic risk in the financial system and studies the different associated measures. The first article presents a review of the literature on systemic risk and macroprudential policy: 1) the negative effects of procyclicality for the financial system as a whole as well as for the real economy 2) the risk of contagion between financial institutions. The second paper of the thesis proposes a new measure of systemic risk to effectively capture the systemic importance of each financial institution within a given system. The third paper of the thesis analyzes the debt structure of banks. Banks choose the maturity of their debt in the short and/or long term. The negative externalities generated by the excess of short-term financing only appear when the probability of a macroeconomic shock is sufficiently large.

We study competition in capital markets subject to moral hazard when investors cannot prevent side trading. Perfect competition is impeded by entrepreneurs’ threat to borrow excessively from multiple lenders and to shirk. As a consequence, investors earn positive rents at equilibrium. We then analyze how investors’ ability to design financial contracts with covenants deals with this counterparty externality. We show that enlarging investors’ contracting opportunities generates a severe market failure: with covenants, market equilibria are indeterminate and Pareto ranked. Market outcomes are then determined by designing specific financial institutions. Information sharing systems restore efficiency but leave a positive rent to investors. A mechanism of investors-financed subsidies to entrepreneurs mitigates the threat of default and sustains the competitive allocation.

The objective of this thesis is to study the extent to which the ownership structure of venture capital (VC) firms influences the supply and quality of financing for innovative project holders. In particular, this research aims to understand the relative merits of financing by independent VC firms and those affiliated with a banking network. Affiliated firms make optimal decisions regarding the continuation of funded projects. This is not the case for independent firms, but they provide better assistance to the entrepreneur, which is crucial for the success of innovative projects. These results provide a new explanation for the debate on international differences in the dynamism of VC markets. Empirical tests partially validate the predictions of the theoretical model. The first chapter is devoted to a review of the literature on the structure of VC firms. The second chapter proposes a theoretical model to compare the advantages of independent VC firms and those affiliated with banking networks for an entrepreneur with an innovative project. The third chapter deepens this analysis by introducing the possibility of entrusting the entrepreneur with the decision-making power on the continuation of the projects. In the fourth chapter, we apply the model to VC firms wishing to withdraw precipitously from financed projects to benefit from other opportunities. Finally, in the fifth chapter, we empirically test the model's predictions on a sample of investments from two French VC firms, one independent and the other affiliated with a banking network.

This thesis proposes a theoretical study of the optimal financial structure of firms, in the framework of principal-agent models with moral hazard. In this sense, it is part of the recent theoretical developments in agency theory. The first chapter presents a review of the literature explaining the choice of a financial structure by moral hazard problems (green (1984), innes (1990), gale and hellwig (1985), bolton and sharfstein (1990). . ). These theoretical results are contrasted with empirical observations (Bradley, Jarell, and Kim (1984), Long and Malitz (1985), and Barclay, Smith, and Watts (1995)). . ). This highlights the relevance of the models cited, as well as their shortcomings, especially when it comes to explaining the emergence of a mixed financial structure. The second and third chapters offer personal contributions to these issues. The second chapter is a re-reading of the theory of jensen and meckling (1976) in a framework of optimal contracts. The moral hazard problems considered arise from the fact that a manager can choose both a certain level of effort and a certain level of risk when he decides to commit to a project. We show that when the risk choice problem is dominant, the joint issuance of debt and equity is an optimal capital structure. On the other hand, when the effort choice problem is dominant, it is necessary to add to this structure stock options, allocated to the manager, in order to preserve his incentives to effort. The third chapter deals with the financing of start-ups, and the dual role played by financial partners such as business angels. The latter bring to the companies their experience of business management, as well as their financial means. Their intervention is modeled in a context of double moral hazard, where managers and financiers must both make an effort to improve the profitability of the project. We show how the issuance of preferred shares or convertible bonds is an optimal response to the incentive problems posed. These results are supported by empirical evidence.