Corporate Governance and Capital Structure Dynamics

• 成果类型: Article
• 署名作者: Morellec, Erwan; Nikolov, Boris; Schuerhoff, Norman
• 署名单位: Swiss Finance Institute (SFI); Swiss Federal Institutes of Technology Domain; Ecole Polytechnique Federale de Lausanne; University of Rochester; Swiss Finance Institute (SFI); University of Lausanne
• 刊物名称: JOURNAL OF FINANCE
• ISSN/ISSBN: 0022-1082
• DOI: 10.1111/j.1540-6261.2012.01735.x
• 发表日期: 2012
• 页码: 803-848
• 关键词: Managerial discretion; cross-section; AGENCY COSTS; debt; RISK; INVESTMENT; management; options; entrenchment; persistence

摘要

We develop a dynamic tradeoff model to examine the importance of managershareholder conflicts in capital structure choice. In the model, firms face taxation, refinancing costs, and liquidation costs. Managers own a fraction of the firms equity, capture part of the free cash flow to equity as private benefits, and have control over financing decisions. Using data on leverage choices and the models predictions for different statistical moments of leverage, we find that agency costs of 1.5% of equity value on average are sufficient to resolve the low-leverage puzzle and to explain the dynamics of leverage ratios. Our estimates also reveal that agency costs vary significantly across firms and correlate with commonly used proxies for corporate governance.