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Please use this identifier to cite or link to this item: http://hdl.handle.net/10400.5/2513

Title: Capital Structure, Risk and Asymmetric Information: Theory and Evidence
Authors: Ibrahimo, Muradali V.
Barros, Carlos Pestana
Keywords: Risk
asymmetric information
capital structure
Issue Date: 2010
Publisher: ISEG – Departamento de Economia
Citation: Ibrahimo, Muradali V. e Carlos Pestana Barros. 2010. "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.: DE Working papers;nº 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/10400.5/2513
ISSN: 0874-4548
Publisher version: http://aquila2.iseg.utl.pt/aquila/getFile.do?method=getFile&fileId=94308
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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