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| Author: | Almazan, A. Suarez, J. |
| Title: | Managerial compensation and the market reaction to bank loans |
| Journal: | Review of Financial Studies
2003 : SPRING, VOL. 16:1, p. 237-261 |
| Index terms: | Banking Financial models |
| Freeterms: | Monitoring |
| Language: | eng |
| Abstract: | The article considers why a manager would choose to submit himself to the discipline of bank monitoring. The issue is analyzed within the context of a model where the manager enjoys private benefits, which can be restricted by the monitor, and is optimally compensated by shareholders. Within this setting the authors find that managers will submit to monitoring when they receive favourable private information. The result suggests that the market has a favorable view of financing choices that increase monitoring. |
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