Shareholders and debtholders have diverging objectives.Shareholders are residual claimants whereas debtholders are fixed claimants to firm’s assets.In leveraged firms,shareholders may increase the value of their clai...Shareholders and debtholders have diverging objectives.Shareholders are residual claimants whereas debtholders are fixed claimants to firm’s assets.In leveraged firms,shareholders may increase the value of their claims at the expense of debtholders.The presence of shareholders being debtholders is a smart interest alignment,providing a solution to shareholder-debtholder conflicts.This paper focuses on small businesses,which play an important role in the United States economy but are generally neglected by academia.Utilizing National Survey of Small Business Finance(NSSBF)data,this paper shows that firms with higher agency cost of debt are more likely to issue owner loan.The incidence of small business owner loan is positively associated with external lending difficulty,low shareholder agency cost and firm valuation difficulty.展开更多
文摘Shareholders and debtholders have diverging objectives.Shareholders are residual claimants whereas debtholders are fixed claimants to firm’s assets.In leveraged firms,shareholders may increase the value of their claims at the expense of debtholders.The presence of shareholders being debtholders is a smart interest alignment,providing a solution to shareholder-debtholder conflicts.This paper focuses on small businesses,which play an important role in the United States economy but are generally neglected by academia.Utilizing National Survey of Small Business Finance(NSSBF)data,this paper shows that firms with higher agency cost of debt are more likely to issue owner loan.The incidence of small business owner loan is positively associated with external lending difficulty,low shareholder agency cost and firm valuation difficulty.
