Managerial Entrenchment and the Choice of Debt Financing /

The paper analyzes the choice between public and private debt by an entrenched manager. The model shows that when the firm's credit risk is low, management issues public bonds because of the value gains from increased flexibility rather than reduced restrictions and monitoring. In fact, managem...

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Bibliographic Details
Main Author: Sy, Amadou
Format: Journal
Language:English
Published: Washington, D.C. : International Monetary Fund, 1999.
Series:IMF Working Papers; Working Paper ; No. 1999/094
Online Access:Full text available on IMF
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245 1 0 |a Managerial Entrenchment and the Choice of Debt Financing /  |c Amadou Sy. 
264 1 |a Washington, D.C. :  |b International Monetary Fund,  |c 1999. 
300 |a 1 online resource (29 pages) 
490 1 |a IMF Working Papers 
500 |a <strong>Off-Campus Access:</strong> No User ID or Password Required 
500 |a <strong>On-Campus Access:</strong> No User ID or Password Required 
506 |a Electronic access restricted to authorized BRAC University faculty, staff and students 
520 3 |a The paper analyzes the choice between public and private debt by an entrenched manager. The model shows that when the firm's credit risk is low, management issues public bonds because of the value gains from increased flexibility rather than reduced restrictions and monitoring. In fact, management's expected private gains decrease as initial private debt restrictions are selectively relaxed. In contrast, when credit risk is high, management issues private debt because of the value gains and private benefits from renegotiating more stringent restrictions. When the maturity of private debt is shortened, however, privately and publicly placed bonds can be preferred to bank debt. 
538 |a Mode of access: Internet 
830 0 |a IMF Working Papers; Working Paper ;  |v No. 1999/094 
856 4 0 |z Full text available on IMF  |u http://elibrary.imf.org/view/journals/001/1999/094/001.1999.issue-094-en.xml  |z IMF e-Library