The Impact of Corporate Governance Structures on the Agency Cost of Debt
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Summary:
This paper uses a stochastic continuous time model of the firm to study how different corporate governance structures affect the agency cost of debt. In the absence of asymmetric information, it shows that control of the firm by debtholders with a minority stake delays the exit decision and reduces the underinvestment problem. Such a governance structure may play an important role in diminishing conflicts between shareholders and debtholders.
Series:
Working Paper No. 2001/204
Subject:
Banking Corporate governance Currencies Debt financing Economic sectors External debt Financial institutions Inflation Money Prices Stocks
English
Publication Date:
December 1, 2001
ISBN/ISSN:
9781451874501/1018-5941
Stock No:
WPIEA2042001
Pages:
12
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