THE “THEORY OF LOOTING.”

THE “THEORY OF LOOTING.” Here is the text of the article by Akerlof and Romer. This wikipedia article summarizes the article: “”Bankruptcy for profit will occur if poor accounting, lax regulation, or low penalties for abuse give owners an incentive to pay themselves more than their firms are worth and then default on their debt obligations. Bankruptcy for profit occurs most commonly when a government guarantees a firm’s debt obligations.”

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