Monitoring and structure of debt contracts

• 成果类型: Article
• 署名作者: Park, C
• 署名单位: Hong Kong University of Science & Technology
• 刊物名称: JOURNAL OF FINANCE
• ISSN/ISSBN: 0022-1082
• DOI: 10.1111/0022-1082.00283
• 发表日期: 2000
• 页码: 2157-2195
• 关键词: capital structure; MULTIPLE INVESTORS; seniority; COSTS; liquidation; covenants; maturity; CHOICE

摘要

This paper presents a theory of optimal debt structure when the moral hazard problem is severe. The main idea is that the optimal debt contract delegates monitoring. to a single senior lender and that seniority allows the monitoring senior lender to appropriate the full return from his monitoring activities. The theory explains (i) why debt contracts are prioritized, (ii) why short-term debt is senior to long-term debt, and (iii) why financial intermediaries usually hold short-term senior debt whereas long-term junior debt is widely held. Another implication of the theory is that covenant and maturity structures will be set to conform to the seniority structure.