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When managers cannot commit: Capital structure under inalienable managerial entrenchment

  • Thomas, Catherine
  • Wang, Yongxiang
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    When partially inalienable managerial entrenchment is introduced to Zwiebel's 1996 model of dynamic capital structure, anticipated debt renegotiation between a higher-type manager and the creditor reduces expected firm value. Only lower-type managers can issue debt to avoid shareholder takeover.

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    File URL: http://www.sciencedirect.com/science/article/B6V84-51GRWDP-4/2/ad8e576cfda5d1d22460974ccd0fdb4f
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    Article provided by Elsevier in its journal Economics Letters.

    Volume (Year): 110 (2011)
    Issue (Month): 2 (February)
    Pages: 107-109

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    Handle: RePEc:eee:ecolet:v:110:y:2011:i:2:p:107-109
    Contact details of provider: Web page: http://www.elsevier.com/locate/ecolet

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    1. Shleifer, Andrei & Vishny, Robert W., 1989. "Management entrenchment : The case of manager-specific investments," Journal of Financial Economics, Elsevier, vol. 25(1), pages 123-139, November.
    2. Aghion, Philippe & Hart, Oliver & Moore, John, 1992. "The Economics of Bankruptcy Reform," Journal of Law, Economics and Organization, Oxford University Press, vol. 8(3), pages 523-46, October.
    3. Jensen, M.C. & Murphy, K.J., 1988. "Performance Pay And Top Management Incentives," Papers 88-04, Rochester, Business - Managerial Economics Research Center.
    4. Zwiebel, Jeffrey, 1996. "Dynamic Capital Structure under Managerial Entrenchment," American Economic Review, American Economic Association, vol. 86(5), pages 1197-1215, December.
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