By Kai Rudolph
This paintings was once permitted as a dissertation by way of the college of Muenster, Germany, in 2004. It used to be written whereas i used to be a educating and study assistant on the division of Banking. I personal many accounts - own and highbrow - to Professor Dr. Andreas Pfingsten, my doctoral adviser, for his total aid whereas i used to be writing my dissertation. This thesis benefited a lot from his positive feedback. i'm additionally thankful that Professor Dr. Klaus Roder, division of Finance, collage of Regensburg, Germany, acted as my moment consultant. moreover, i would like to thank Dr. Alistair Milne, Sir John Cass enterprise tuition, urban college, nice Britain, considering the fact that he assisted me in the course of an important part of my dissertation venture whereas i used to be staying as a vacationing pupil on the Marie Curie education web site in company Finance, Capital Markets and Banking at Cass. This 5 month stopover at in London was once financially supported by way of the eu fee (Fellowship Ref. No. HPMT-GH-01-00330-04). i'm additionally indebted to my past colleagues, quite often Dr. Hendrik Hakenes and Dr. Markus Ricke, for his or her encouragement and beneficial discussions all through my complete dissertation venture. The dissertation additionally benefited from reviews on a primary operating paper concerning the dissertation's subject through contributors of study seminars on the Universities of Constance, Tuebingen and Osnabrueck, Germany, and on the 2003 Annual assembly of the ecu fiscal organization, Stockholm, Sweden.
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Extra info for Bargaining Power Effects in Financial Contracting: A Joint Analysis of Contract Type and Placement Mode Choices
The borrower's placement mode choice but also on the degree of information sensitivity of the chosen contract type. A Model to Analyze Bargaining Power Effects In this chapter an analytical principal-agent framework with a lender and a borrower is developed to examine bargaining power effects in financial contracting. The lender and the borrower bargain how to finance a risky project. Since public as well as private debt and equity are considered as potential contract type /placement mode (ci/pm)-constellations, this study focuses on borrowers with access to these markets.
For example, Harris and Raviv (1988a) show the relevance of a firm's capital structure for takeover contests taking the security structure of voting equity and debt as given. In their model the incumbent management possesses shares of the own company and has the ability to increase their voting/bargaining power by replacing outstanding equity through debt. However, any increase in the incumbent's voting power causes the firm's default probability to increase. In case of default the incumbent management loses the benefits it derives from corporate control.
2 . 1 Debt's Placement Mode Each firm's debt placement mode choice is affected by ex-ante informational asymmetries between lender and borrower, since each borrowing decision causes adverse selection difficulties for financial contracting (cf. Leland and Pyle (1977)). These difficulties can arise since the managers, acting in the interest of the current shareholders, only issue securities to new investors if investors See, e. g.. Heron and Lie (2004) for a comparison of a regular and an (uninsured) rights offering's information content.
Bargaining Power Effects in Financial Contracting: A Joint Analysis of Contract Type and Placement Mode Choices by Kai Rudolph