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dc.contributor.authorLeite, Tore
dc.date.accessioned2006-07-14T10:44:15Z
dc.date.available2006-07-14T10:44:15Z
dc.date.issued2000-12
dc.identifier.issn1500-4066
dc.identifier.urihttp://hdl.handle.net/11250/163793
dc.description.abstractFirms' financial structures typically consist of debt claims of different priority and maturity, and outside equity with control rights. The present paper develops a simple control theory of financial structure in which these features arise endogeneously to allocate control and cash flow rights among the firm's manager and its investors. While short-term debt commits the manager to liquidate the firm in low profit states, outside equity with unconditional control allows investors to seize control in states for which the manager otherwise would pursue low profit projects that yield high private benefits of control. Finally, long-term subordinated debt protects the manager from excessive shareholder involvement.en
dc.format.extent256311 bytes
dc.format.mimetypeapplication/pdf
dc.language.isoengen
dc.publisherNorwegian School of Economics and Business Administration. Department of Finance and Management Scienceen
dc.relation.ispartofseriesDiscussion paperen
dc.relation.ispartofseries2000:25en
dc.titleA control theory of financial structure : outside equity control and the priority and maturity structure of debten
dc.typeWorking paperen


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