MARC Record from harvard_bibliographic_metadata

LEADER: 01648nam a2200229Ka 4500
001 012216479-2
005 20100301105357.0
008 090528s2010 maua b 000|0 eng d
035 0 $aocn567563023
100 1 $aBecker, Bo.
245 10 $aEquity-debtholder conflicts and capital structure /$cBo Becker, Per Strömberg.
260 $a[Boston] :$bHarvard Business School,$cc2010.
300 $a29 p. :$bill. ;$c28 cm.
490 1 $aWorking paper / Harvard Business School ;$v10-070
500 $a"February 2010"--Publisher's website.
504 $aIncludes bibliographical references.
520 $aWe use an important legal event as a natural experiment to examine equity-debt conflicts in the vicinity of financial distress. A 1991 Delaware bankruptcy ruling changed the nature of corporate directors' fiduciary duties in that state. This change limited incentives to take actions favoring equity over debt. We show that, as predicted, this increased the likelihood of equity issues, increased investment, and reduced risk taking. The changes are isolated to indebted firms (where the legal change applied). These reductions in agency costs were followed by an increase in average leverage and a reduction in interest costs. Finally, we can estimate the welfare implications of agency costs, because firm values increased when the rules were introduced. We conclude that equity-bond holder conflicts are economically important, determine capital structure choices, and affect welfare.
700 1 $aStrömberg, Per.
710 2 $aHarvard Business School.
830 0 $aWorking paper (Harvard Business School) ;$v10-070.
988 $a20100301
906 $0MH