Series: IMF Working Papers
Author(s): Amadou Sy
Publisher: INTERNATIONAL MONETARY FUND
Publication Date: 01 July 1999
Keywords: Covenant Restrictions, Credit Risk, Managerial Entrenchment, Private Debt, Public Debt, benefits, debt contract, long-term debt
The paper analyzes the choice between public and private debt by an entrenched manager. The model shows that when the firm’s credit risk is low, management issues public bonds because of the value gains from...