International Activities, Agency Problems, and Corporate Financing-Empirical Evidence for German Firms

29 Pages Posted: 19 Jul 2007 Last revised: 26 May 2009

See all articles by Malte Brockmann

Malte Brockmann

EBS Universität für Wirtschaft und Recht - EBS Business School - Department of Finance and Accounting

Ulrich Hommel

EBS Business School

Ansgar Richter

University of Liverpool - Management School (ULMS)

Date Written: January 24, 2009

Abstract

This paper examines capital structure decisions as a strategic device to mitigate overinvestment problems. The analysis is based on a two-tiered approach, including agency problems between shareholders and the CEO (firm-level), and between the CEO and international executives (intra-firm level). Results indicate that corporate debt policy is used to mitigate overinvestment problems on both levels. The analysis of debt maturity choices confirms that intra-firm agency problems are unaffected by the level of short-term debt. Overinvestment problems on the firm-level are alleviated by long- and short-term debt.

Keywords: Agency Costs, Capital Structure, Corporate Financing, Multinational Firms, International Business

JEL Classification: F23, G32

Suggested Citation

Brockmann, Malte and Hommel, Ulrich and Richter, Ansgar, International Activities, Agency Problems, and Corporate Financing-Empirical Evidence for German Firms (January 24, 2009). Available at SSRN: https://ssrn.com/abstract=1000745 or http://dx.doi.org/10.2139/ssrn.1000745

Malte Brockmann (Contact Author)

EBS Universität für Wirtschaft und Recht - EBS Business School - Department of Finance and Accounting ( email )

Gustav-Stresemann-Ring 3
Wiesbaden, Hessen 65189
Germany

Ulrich Hommel

EBS Business School ( email )

Gustav-Stresemann-Ring 3
Wiesbaden, 65189
Germany
+49 611 7102 1241 (Phone)
+49 611 7102 10 1241 (Fax)

Ansgar Richter

University of Liverpool - Management School (ULMS) ( email )

Chatham Street
Liverpool, L69 7ZH
United Kingdom
44 [0]151 795 3713 (Phone)
44 [0]151 795 3001 (Fax)

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