Managerial Entrenchment and the Debt-Equity Choice

OK we’ve heard all about shareholder-manager conflicts over the past few years (see Enron, Adelphia, Tyco etc.). And as a result we’ve heard all about corporate governance. But how does it tie back to the classroom in a concrete manner? One of the most frequent ways is to focus on the problems of managerial risk aversion. (For instance: due to risk aversion managers … [ Read more ]