Dividends and debt with managerial agency and lender holdup

• 成果类型: Article
• 署名作者: Kanatas, G; Qi, JP
• 署名单位: Rice University; State University System of Florida; University of South Florida
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.1030.0183
• 发表日期: 2004
• 页码: 1249-1260
• 关键词: dividends; capital structure; managerial agency; lender holdup

摘要

A well-known view in the literature is that if management is more concerned with the firm's survival than with profitability, it is efficient to use a levered capital structure and thereby transfer the liquidation decision to lenders. Our paper extends this idea to a setting where lenders behave opportunistically when they control the liquidation decision. We show that in this situation, an optimal mix of debt and dividends, can mitigate the twin moral hazard problems of the manager and the lender. Given an otherwise optimal capital structure, initiating a dividend policy increases firm value, lowers debt payments, but raises total cash disbursements-interest and dividends-to investors. Numerous other empirical implications of the model are also discussed.