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Abstract
This paper provides a moral hazard characterization of the effects of lending relationship on cost of funds. I develop a model that studies the problem of financial contracting between a bank and an entrepreneur and isolates the effect of the lending relationship on the interest rates. The main result is that a bank-entrepreneur relationship has a positive effect on the interest rates, the optimal contract specifying a decreasing sequence of interest rates. The possibility of the entrepreneur to use partially his retained earnings improves the terms of the contract between entrepreneur and lender by reducing the difference between the two interest rates.

Cooperatives received significant attention in recent years as an alternative to investor-owned corporations. The objective of a cooperative to advance the interests of its member-owners is appealing from a societal perspective, particularly when comparing it with a profit-maximizing objective of an investor-owned firm. This thesis focuses on agricultural cooperatives, i.e. on the enterprises collectively owned by farmer-members. It advances the knowledge about a cooperative enterprise in three ways: (i) by conceptualizing and evaluating different patterns of emergence of cooperatives; (ii) by delineating an efficient allocation of decision rights regarding the profit distribution in cooperatives, from a relational contracting perspective; (iii) and by investigating the determinants of cooperative market shares in the EU. Chapter 1 discusses the distinguishing features of this governance form. First, the owners of a cooperative are also users, because farmers deliver their farm products to the cooperative enterprise. Second, the allocation of ownership implies that residual income and decision rights are allocated to the farmers in a cooperative. Chapter 2 models cooperative emergence as a non-cooperative game between two farmers and an outsider. Chapter 3 formulates a non-cooperative game between the upstream party (farmers) and the downstream party (cooperative management) regarding the distribution of profits of the cooperative enterprise. Chapter 4 provides an empirical analysis of cooperative market shares in the European Union. Lastly, Chapter 5 concludes and addresses how the results can be extended beyond agricultural cooperatives.

Using a sample covering practically all dividend-paying small and medium-sized private companies in Finland during 2006–2010, we document that earnings management in these companies is driven by two concurrent forces: the willingness to pay (tax-exempt) dividends and avoiding unnecessary company income tax. Moreover, we show that the need for income-increasing earnings management enabling current dividend distribution is mitigated by the amount of retained earnings from prior years. This article adds to the existing literature by providing empirical evidence for dividend and tax-driven earnings management in private SMEs facing neither political pressures nor capital market incentives for earnings disclosures. ; Peer reviewed