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Revolving Asset-Based Lending Contracts and the Resolution of Debt-Related Agency Problems

Richard L. Constand, Jerome S. Osteryoung and Donald A. Nast
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Richard L. Constand: University of Hawaii, Manoa
Jerome S. Osteryoung: Florida State University
Donald A. Nast: Florida State University

Journal of Entrepreneurial Finance, 1991, vol. 1, issue 1, 15-28

Abstract: Small firms that do not have access to organized financial markets must often rely on secured commercial loans for their debt financing. In large firms, debt-related agency problems are often resolved through the bond pricing process in the formal debt markets. When these same debt-related agency problems arise in small, private firms, the structure of the secured lending agreement must resolve these problems. This study identifies debt-related agency problems as they exist in private firms and examines howf the lending agreement resolves these problems.

Keywords: Asset Based Lending; ABL; Agency Problem (search for similar items in EconPapers)
JEL-codes: L25 G32 (search for similar items in EconPapers)
Date: 1991
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Handle: RePEc:pep:journl:v:1:y:1991:i:1:p:15-28