The Impact of Corporate Governance Structureson the Agency Cost of Debt

2001 ◽  
Vol 01 (204) ◽  
pp. 1 ◽  
Author(s):  
Jorge A. Chan-Lau ◽  
Keyword(s):  
Corporate Governance ◽  
Agency Cost ◽  
Cost Of Debt ◽  
Agency Cost Of Debt ◽  
The Impact

ON THE PRICING OF AN ISLAMIC CONVERTIBLE MORTGAGE FOR INFRASTRUCTURE PROJECT FINANCING

2002 ◽  
Vol 05 (07) ◽  
pp. 701-728 ◽  
Author(s):  
MUHAMMED-SHAHID EBRAHIM ◽  
TARIQULLAH KHAN
Keyword(s):  
Agency Cost ◽  
Rate Of Return ◽  
Cost Of Debt ◽  
Project Financing ◽  
Exogenous Variables ◽  
Muslim Countries ◽  
Fractional Ownership ◽  
Infrastructure Project ◽  
Agency Cost Of Debt ◽  
The Impact

This paper models a default-free convertible facility to finance infrastructure projects in emerging Muslim countries. The mortgage is designed as a combination of an Islamic credit facility (allowing the collateralization of debt by the assets of the firm as espoused in Scott[32], Stulz and Johnson[36]) and inclusion of real warrants (as espoused in Green[12], Haugen and Senbet[15]) to mitigate the agency cost of debt discussed in Myers[27]. Numerical simulation is employed to endogenously solve for the rate of return, tenure and fractional ownership to be conveyed to financier upon conversion of the facility without resorting to any interest based (ribawi) index. Finally, sensitivity analysis is conducted to study the impact of exogenous variables and to reconcile with the existing mainstream finance literature such as Barclay and Smith[3], Stohs and Mauer [35] and Guedes and Opler [13].

scholarly journals Corporate governance structures and the agency cost of debt

2009 ◽  
Vol 7 (2) ◽  
pp. 451-457 ◽  
Author(s):  
Jorge A. Chan-Lau
Keyword(s):  
Corporate Governance ◽  
Asymmetric Information ◽  
Continuous Time ◽  
Governance Structure ◽  
Agency Cost ◽  
Cost Of Debt ◽  
Governance Structures ◽  
Continuous Time Model ◽  
Time Model ◽  
Agency Cost Of Debt

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.

scholarly journals Agency costs and corporate governance mechanisms in Indian state-owned companies and privately owned companies - A panel data analysis

2014 ◽  
Vol 11 (4) ◽  
pp. 8-17
Author(s):  
Stuart Locke ◽  
Geeta Duppati
Keyword(s):  
Corporate Governance ◽  
Agency Costs ◽  
Panel Data Analysis ◽  
Agency Cost ◽  
Open Market ◽  
Public Companies ◽  
Corporate Governance Mechanisms ◽  
The Government ◽  
Suitable Reference ◽  
The Impact

This paper explores the impact of corporate governance reforms and changing ownership patterns of core public sector enterprises. A number of reforms were introduced by the Government of India in 1991, and intensified in 2004 with the aim of improving efficiency and financial performance across state owned enterprises. The core state enterprises provide a unique opportunity to consider two aspects of the reforms. First, did the reforms have an impact, and second, is there a distinguishable difference between wholly government owned and partially-public shareholding enterprises? The public listed companies provide a suitable reference point for comparison. A comprehensive dataset of 123 SOEs and matching listed public companies for 10 years was collected for the study. A regression approach is adopted with agency cost as the dependant variable and several corporation-specific governance variables. Size and industry are the independent variables. The findings of the study indicate that the agency costs for mixed ownership models tend to be lower than those of the concentrated state-owned firms because they operate in an open market with the market facing the regulatory framework of a competitive environment.

Measuring the Agency Cost of Debt

1992 ◽  
Vol 47 (5) ◽  
pp. 1887-1904 ◽  
Author(s):  
ANTONIO S. MELLO ◽  
JOHN E. PARSONS
Keyword(s):  
Agency Cost ◽  
Cost Of Debt ◽  
Agency Cost Of Debt

scholarly journals Determinants of Small Business Owner Loan

2019 ◽  
Vol 3 (2) ◽  
pp. 8
Author(s):  
Jiameng Ma
Keyword(s):  
Small Business ◽  
Small Businesses ◽  
The United States ◽  
Agency Cost ◽  
Cost Of Debt ◽  
Business Owner ◽  
Small Business Owner ◽  
Small Business Finance ◽  
United States Economy ◽  
Agency Cost Of Debt

Shareholders and debtholders have diverging objectives. Shareholders are residual claimants whereas debtholders are fxed claimants to frm’s assets. In leveraged frms, shareholders may increase the value of their claims at the expense of debtholders. The presence of shareholders being debtholders is a smart interest alignment, providing a solution to shareholder-debtholder conflicts. This paper focuses on small businesses, which play an important role in the United States economy but are generally neglected by academia. Utilizing National Survey of Small Business Finance (NSSBF) data, this paper shows that frms with higher agency cost of debt are more likely to issue owner loan. The incidence of small business owner loan is positively associated with external lending diffculty, low shareholder agency cost and frm valuation diffculty.

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