Corporate governance and the agency costs of debt and outside equity

P.G. Szilagyi

Research output: ThesisDoctoral ThesisScientific

338 Downloads (Pure)

Abstract

The agency literature identifies two critical principal-agent problems in the context of the firm. On one hand, the separation of ownership and control may lead management to seek private benefits rather than maximize shareholder value. On the other, shareholders may themselves expropriate creditors by increasing risk. This dissertation examines the effectiveness of the tools available to the principals in each of these conflicts to mitigate agency costs. The first half of the thesis focuses on the creditor-shareholder conflict in the context of corporate restructuring. Chapter 2 provides a comprehensive review of existing research on how bondholders respond to restructuring events. Chapter 3 shows that cross-country differences in governance and legal standards are a key determinant of bondholder response to mergers and acquisitions. The second half of the thesis reexamines the effectiveness of two agency mechanisms available to shareholders to contain managerial discretion. Chapter 4 reopens the debate on the substitutability of dividends and shareholder control as alternative agency devices, by showing how ownership and the use of anti-shareholder provisions affect the dividend behavior of Dutch firms. The final Chapter 5 examines the US proxy process, and provides evidence on the much-debated effectiveness of shareholder proposals in mitigating agency problems.
Original languageEnglish
QualificationDoctor of Philosophy
Awarding Institution
  • Tilburg University
Supervisors/Advisors
  • Renneboog, Luc, Promotor
Award date17 Dec 2007
Place of PublicationTilburg
Publisher
Print ISBNs9789056682040
Publication statusPublished - 2007

Fingerprint

Equity
Agency costs of debt
Corporate governance
Shareholders
Dividends
Bondholders
Managerial discretion
Agency costs
Private benefits
Ownership
Governance
Substitutability
Country differences
Increasing risk
Ownership and control
Mergers and acquisitions
Shareholder value
Agency problems
Corporate restructuring
Principal-agent problem

Cite this

Szilagyi, P. G. (2007). Corporate governance and the agency costs of debt and outside equity. Tilburg: CentER, Center for Economic Research.
Szilagyi, P.G.. / Corporate governance and the agency costs of debt and outside equity. Tilburg : CentER, Center for Economic Research, 2007. 164 p.
@phdthesis{9520d40a224f43a89bf9bf69f49062ee,
title = "Corporate governance and the agency costs of debt and outside equity",
abstract = "The agency literature identifies two critical principal-agent problems in the context of the firm. On one hand, the separation of ownership and control may lead management to seek private benefits rather than maximize shareholder value. On the other, shareholders may themselves expropriate creditors by increasing risk. This dissertation examines the effectiveness of the tools available to the principals in each of these conflicts to mitigate agency costs. The first half of the thesis focuses on the creditor-shareholder conflict in the context of corporate restructuring. Chapter 2 provides a comprehensive review of existing research on how bondholders respond to restructuring events. Chapter 3 shows that cross-country differences in governance and legal standards are a key determinant of bondholder response to mergers and acquisitions. The second half of the thesis reexamines the effectiveness of two agency mechanisms available to shareholders to contain managerial discretion. Chapter 4 reopens the debate on the substitutability of dividends and shareholder control as alternative agency devices, by showing how ownership and the use of anti-shareholder provisions affect the dividend behavior of Dutch firms. The final Chapter 5 examines the US proxy process, and provides evidence on the much-debated effectiveness of shareholder proposals in mitigating agency problems.",
author = "P.G. Szilagyi",
year = "2007",
language = "English",
isbn = "9789056682040",
series = "CentER Dissertation Series",
publisher = "CentER, Center for Economic Research",
school = "Tilburg University",

}

Szilagyi, PG 2007, 'Corporate governance and the agency costs of debt and outside equity', Doctor of Philosophy, Tilburg University, Tilburg.

Corporate governance and the agency costs of debt and outside equity. / Szilagyi, P.G.

Tilburg : CentER, Center for Economic Research, 2007. 164 p.

Research output: ThesisDoctoral ThesisScientific

TY - THES

T1 - Corporate governance and the agency costs of debt and outside equity

AU - Szilagyi, P.G.

PY - 2007

Y1 - 2007

N2 - The agency literature identifies two critical principal-agent problems in the context of the firm. On one hand, the separation of ownership and control may lead management to seek private benefits rather than maximize shareholder value. On the other, shareholders may themselves expropriate creditors by increasing risk. This dissertation examines the effectiveness of the tools available to the principals in each of these conflicts to mitigate agency costs. The first half of the thesis focuses on the creditor-shareholder conflict in the context of corporate restructuring. Chapter 2 provides a comprehensive review of existing research on how bondholders respond to restructuring events. Chapter 3 shows that cross-country differences in governance and legal standards are a key determinant of bondholder response to mergers and acquisitions. The second half of the thesis reexamines the effectiveness of two agency mechanisms available to shareholders to contain managerial discretion. Chapter 4 reopens the debate on the substitutability of dividends and shareholder control as alternative agency devices, by showing how ownership and the use of anti-shareholder provisions affect the dividend behavior of Dutch firms. The final Chapter 5 examines the US proxy process, and provides evidence on the much-debated effectiveness of shareholder proposals in mitigating agency problems.

AB - The agency literature identifies two critical principal-agent problems in the context of the firm. On one hand, the separation of ownership and control may lead management to seek private benefits rather than maximize shareholder value. On the other, shareholders may themselves expropriate creditors by increasing risk. This dissertation examines the effectiveness of the tools available to the principals in each of these conflicts to mitigate agency costs. The first half of the thesis focuses on the creditor-shareholder conflict in the context of corporate restructuring. Chapter 2 provides a comprehensive review of existing research on how bondholders respond to restructuring events. Chapter 3 shows that cross-country differences in governance and legal standards are a key determinant of bondholder response to mergers and acquisitions. The second half of the thesis reexamines the effectiveness of two agency mechanisms available to shareholders to contain managerial discretion. Chapter 4 reopens the debate on the substitutability of dividends and shareholder control as alternative agency devices, by showing how ownership and the use of anti-shareholder provisions affect the dividend behavior of Dutch firms. The final Chapter 5 examines the US proxy process, and provides evidence on the much-debated effectiveness of shareholder proposals in mitigating agency problems.

M3 - Doctoral Thesis

SN - 9789056682040

T3 - CentER Dissertation Series

PB - CentER, Center for Economic Research

CY - Tilburg

ER -

Szilagyi PG. Corporate governance and the agency costs of debt and outside equity. Tilburg: CentER, Center for Economic Research, 2007. 164 p. (CentER Dissertation Series).