CEO Duality, Agency Costs, and Internal Capital Allocation Efficiency

Efficiency of Internal Capital Allocation and the Success of Acquisitions

Agency costs and efficiency of business capital investment: evidence from quarterly capital expenditures

Using the quarterly Compustat files, we present empirical findings that business capital investment is significantly higher in the fourth quarter than in other quarters. Even after controlling for business capital investment determinants, we find that the fourth quarter capital investment is significantly larger but less sensitive to investment opportunities than other quarters’ capital investm...

Agency Costs, Risk Management, and Capital Structure

The joint determination of capital structure and investment risk is examined. Optimal capital structure re ects both the tax advantages of debt less default costs (Modigliani-Miller), and the agency costs resulting from asset substitution (Jensen-Meckling). Agency costs restrict leverage and debt maturity and increase yield spreads, but their importance is relatively small for the range of envi...

Bank Capital, Agency Costs, and Monetary Policy

Evidence suggests that banks, like firms, face financial frictions when raising funds. The authors develop a quantitative, monetary business cycle model in which agency problems affect both the relationship between banks and firms and the relationship between banks and their depositors. As a result, bank capital and entrepreneurial net worth jointly determine aggregate investment, and are impor...

Managerial Flexibility, Agency Costs and Optimal Capital Structure

This paper investigates the effect of managerial flexibility on the choice of capital structure for a firm and the corresponding valuation of its long term debt. We consider a general model in continuous time where the manager (who is not a shareholder) of a firm with long term debt in place may dynamically switch strategies at random times so as to maximize his expected discounted compensation...