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The role of secured debt in resolving agency conflicts and problems of asymmetric information: Indian evidence

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  • Majumdar, Raju

Abstract

The determinants of corporate indebtedness have been one of the most debated issues in empirical corporate finance research. In the Indian context, a number of research papers focusing on the said issue emerged since the 1990s. These research studies classified borrowing (the explained variable) based on the time perspective, namely, long-term and short-term. While this temporal categorization of borrowed capital remains important in analyzing capital structure choice, an alternative categorization based on whether borrowing is collateralized (secured) or not, has remained off focus. Consequently, the role of secured debt in addressing agency issues and problems of asymmetric information has remained largely unexplored. This exploratory research paper aims at addressing this issue, using a sample of manufacturing firms listed in the BSE 500 and SNP CNX 500 index.

Suggested Citation

  • Majumdar, Raju, 2012. "The role of secured debt in resolving agency conflicts and problems of asymmetric information: Indian evidence," MPRA Paper 37925, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:37925
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    File URL: https://mpra.ub.uni-muenchen.de/37925/1/MPRA_paper_37925.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Borrowing; Debt; Secured; Unsecured; Capital Structure Theory;

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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