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Please use this identifier to cite or link to this item: http://hdl.handle.net/10400.5/1856

Title: Capital structure, risk and asymmetric information : theory and evidence
Authors: Ibrahimo, Muradali V.
Barros, Carlos Pestana
Keywords: Risk
Asymmetric information
Credit
Capital structure
Issue Date: 2010
Publisher: ISEG - Departamento de Economia.
Citation: Ibrahimo, Muradali V., Carlos Pestana Barros. 2009. "Capital structure, risk and asymmetric information : theory and evidence". Instituto Superior de Economia e Gestão-DE working papers nº 5-2010/DE/UECE/CESA.
Series/Report no.: Working papers; 5/2010/DE/UECE/CESA
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.
URI: http://hdl.handle.net/10400.5/1856
ISSN: 0874-4548
Appears in Collections:UECE - Documentos de Trabalho / UECE - Working Papers
CEsA - Documentos de Trabalho / CEsA - Working Papers
DE - Documentos de trabalho / Working Papers

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