Participation Financing as a Solution to the Agency Problem of Perk Consumption in Small Firms

Artikel

Although it has been suggested that participation financing may allow publicly traded firms to reduce the agency cost of perk consumption, the effect of this type of financing in small firms needs more discussion. The objective of the article is to analyze the small firm effects on the effectiveness of the participation financing in dealing with the agency problem of perk consumption. The participation option gives outside investors less protection against the excessive entrepreneur perk consumption when the firm’s default risk is high. By contrast, the option is more effective in firms with rapid growth or high levels of information asymmetry and therefore high monitoring costs.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Journal: Journal of Small Business Finance ; ISSN: 1057-2287 ; Volume: 3 ; Year: 1994 ; Issue: 3 ; Pages: 215-227 ; Greenwich, CT: JAI Press

Classification and Topics

• Classification: Management ; Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill ; Firm Performance: Size, Diversification, and Scope
• Subject: Participation Financing ; Agency Problem ; Perk ; Perquisite ; Small Firm ; Small Business

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Yu, Hua
• Event: Veröffentlichung
• (who): JAI Press
• (where): Greenwich, CT
• (when): 1994

Further information

• Handle: http://hdl.handle.net/10419/114677
• Last update: 10.03.2025, 11:42 AM CET