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Capital Structure, Risk and Asymmetric Information: Theory and Evidence (Ibrahimo M. V., Barros C. P.)

Information Asymmetry and Transparency Risk-taking and Risk Management

Abstract This paper proposes a principal-agent model between banks and firms with risk and asymmetric information. A mixed form of finance to firms is assumed. The capital structure of firms is a relevant cause for the final aggregate level of investment in the economy. In the model analyzed, there may be a separating equilibrium, which is not economically efficient, because aggregate investments fall short of the first-best level. Based on European firm-level data, an empirical model is presented which validates the result of the relevance of the capital structure of firms. The relative magnitude of equity in the capital structure makes a real difference to the profits obtained by firms in the economy.
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Libref/ Ibrahimo M. V., Barros C. P. (2010) “Capital Structure, Risk and Asymmetric Information: Theory and Evidence”, ISEG working paper № 05, pp. 1-19
© Программирование — Александр Красильников, 2008
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