Sinking Funds and the Agency Costs of Corporate Debt
Abstract
This paper examines whether a firm's sinking fund decision is affected by agency costs. The paper argues that sinking funds can be an effective device to resolve the problems of information asymmetry, risk incentives, and suboptimal investments. Empirical tests are provided. Results show that firms with certain characteristics related to agency problems tend to adopt a sinking fund provision in the bond indenture. Copyright 1990 by MIT Press.Download Info
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Bibliographic Info
Article provided by Eastern Finance Association in its journal The Financial Review.
Volume (Year): 25 (1990)
Issue (Month): 1 (February)
Pages: 95-113
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Web page: http://www.easternfinance.org/
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Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.Cited by:
- Roden, Foster & Stripling, Tom, 1996. "Dividend reinvestment plans as efficient methods of raising equity financing," Review of Financial Economics, Elsevier, vol. 5(1), pages 91-100.
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