When managers cannot commit: Capital structure under inalienable managerial entrenchment

Catherine Thomas and Yongxiang Wang

Economics Letters, 2011, vol. 110, issue 2, 107-109

Abstract: 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.

Keywords: Managerial; entrenchment; Commitment; Debt; Bankruptcy (search for similar items in EconPapers)
Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:110:y:2011:i:2:p:107-109

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