Title

In the shadow of failure: Asset preferences and competing interests in distressed firms

Abstract

The question of how creditors influence firm investment decisions, and how shareholders compare to creditors in that regard, has received little attention in the literature. The agency costs of debt are examined, and a framework is proposed in which creditors and shareholders differ with respect to the types of asset holdings each prefers. Results reflect these distinctions, but also show that creditors exhibit asset preference distinctions depending upon the type of debt contract held. Implications of the research are discussed and directions for future research are suggested.

Department(s)

Management

Document Type

Article

Stable URL

https://www.jstor.org/stable/40604603

Publication Date

6-1-2008

Journal Title

Journal of Managerial Issues

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