The Impact of Corporate Governance Structures on the Agency Cost of Debt

Author/Editor:

Jorge A Chan-Lau

Publication Date:

December 1, 2001

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

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. 01/204

Subject:

English

Publication Date:

December 1, 2001

ISBN/ISSN:

9781451874501/1018-5941

Stock No:

WPIEA2042001

Price:

$15.00 (Academic Rate:$15.00)

Format:

Paper

Pages:

12

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