Negative agency costs
نویسنده
چکیده
Managerial opportunism is commonly considered as destructive for the parties involved in an agency relationship. Using a formulation close to Jensen and Meckling’s equity model, we consider an agency relationship between a manager and an investor. The latter is assumed to benefit from a market power in terms of external funding opportunities. For high values of the prevailing rate of interest, we prove that the agency costs can be negative, either when the manager or the investor acts as the leader in the agency. These results suggest that external conditions may have a differentiated impact on the ex ante and ex post inefficiencies created by managerial opportunism. keywords : corporate finance, agency cost, market power JEL classification : G3
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