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The agency cost of alternative debt instruments

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Show simple item record Mello, António Sampaio en_US Parsons, John E. en_US 2009-12-15T23:53:54Z 2009-12-15T23:53:54Z 1990 en_US
dc.identifier 90-017 en_US
dc.description.abstract In this paper we show how to adapt the traditional contingent claims valuation techniques to correctly value the firm and its liabilities in the presence of agency costs. This enables us to measure the significance of the agency costs as a function of the quantity of debt outstanding and as a function of the design of the debt contract: with this we can determine the relative benefits of alternative contract design. Our work makes a contribution to the recent database about how much debt a corporation can prudently assume. It is possible to measure the agency advantages of the new debt instruments for a given firm, and therefore to determine for which firms the advantages are significant and for which firms they are not. en_US
dc.description.sponsorship Supported by the Program on Investments, Finance and Contracts of the Center for Energy Policy Research, M.I.T. en_US
dc.format.extent 24 p en_US
dc.publisher MIT Center for Energy and Environmental Policy Research en_US
dc.relation.ispartofseries Working paper (Massachusetts Institute of Technology. Center for Energy Policy Research) ; MIT-CEPR 90-017. en_US
dc.title The agency cost of alternative debt instruments en_US
dc.type Working Paper en_US
dc.identifier.oclc 28596106 en_US

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