External Governance and Debt Structure

External Governance and Ownership Structure

External governance (e.g., takeover) and internal governance (e.g., ownership structure) are the most common mechanisms to solve the agency problem in a corporation. Cremers and Nair (2005) make the first effort to investigate one of the interactions between the two mechanisms by considering G-index and block shareholder ownership. This paper investigates the interaction between G-index and exe...

Optimal external debt and default

This paper analyses whether sovereign default episodes can be seen as contingencies of optimal international lending contracts. The model considers a small open economy with capital accumulation and without commitment to repay debt. Taking first order approximations of Bellman equations, I derive analytical expressions for the equilibrium level of debt and the optimal debt contract. In this env...

External Financing Method: Financing through Debt and Stock Issuance

Countries need short, medium, and long-term investment plans for production growth and development. Different sources for these investments can be supplied through retained profit, stock issuance, and bank loans, or a combination them. Institutions and firms need huge amount of capitals for their survival, production, and also development of activities. In addition, these institutions and firms...

The effect of external governance on the choice between bank loans and public debt

This paper examines how external governance pressure provided by both the product market and the market for corporate control affects a borrowing firm’s choice of debt source. Using reductions in import tariffs to capture exogenous changes in a firm’s competitive environment, we find that increased product market competition has a significant negative impact on a firm’s reliance on bank debt fi...

External and Public Debt Crises: Discussion