The Agency Advantage of Debt over the Lifecycle of the Firm

Artikel

The question of an `optimal' capital structure of a firm has been studied for publicly listed businesses for years. From these studies, agency theory has emerged as a good way to understand a firm's capital structure. This paper empirically examines the role that agency theory plays in determining the capital structure of businesses as they move from being small unlisted businesses to newly listed on the stock exchange, to being mature listed businesses. The paper finds that debt has a negative agency advantage (defined as reducing agency costs of equity) for small businesses, a significant but minor advantage at the IPO stage, and a significant advantage at the mature listed stage.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Journal: Journal of Entrepreneurial and Small Business Finance ; ISSN: 1057-2287 ; Volume: 5 ; Year: 1996 ; Issue: 3 ; Pages: 193-211 ; Greenwich, CT: JAI Press

Classification and Topics

• Classification: Management ; Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill ; New Firms; Startups
• Subject: Agency ; Debt ; Lifecycle

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Vos, Ed ; Forlong, Carolyn
• Event: Veröffentlichung
• (who): JAI Press
• (where): Greenwich, CT
• (when): 1996

Further information

• Handle: http://hdl.handle.net/10419/114703
• Last update: 10.03.2025, 11:41 AM CET