An empirical test of the impact of managerial self-interest on corporate capital structure
Article Abstract:
This paper provides a test of whether capital structure decisions are at least in part motivated by managerial self-interest. It is shown that the debt ratio is negatively related to management's shareholding, reflecting the greater nondiversifiable risk of debt to management than to public investors for maintaining a low debt ratio. Unless there is a nonmanagerial principal stockholder, no substantial increase of debt can be realized, which may suggest that the existence of large nonmanagerial stockholders might make the interests of managers and public investors coincide. (Reprinted by permission of the publisher.)
Publication Name: Journal of Finance
Subject: Business
ISSN: 0022-1082
Year: 1988
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A note on the welfare consequences of new option markets
Article Abstract:
Trading in options markets can be shown to have no negative effects on welfare consequences, by an extension of Pareto theories. Investor choices are affected by the opening of an options market, when profits can be made under conditions resembling equilibrium. A model of the extended theory demonstrates that the opening of the market does not affect the prices of original assets.
Publication Name: Journal of Finance
Subject: Business
ISSN: 0022-1082
Year: 1986
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