search query: @indexterm CASH FLOW / total: 488
reference: 117 / 488
| Author: | Garvey, G. T. |
| Title: | Marketable incentive contracts and capital structure relevance. |
| Journal: | Journal of Finance
1997 : MAR, VOL. 52:1, p. 353-378 |
| Index terms: | CAPITAL STRUCTURE OF COMPANIES CASH FLOW INVESTMENT INCENTIVES CASH FLOW DEBT FINANCING |
| Language: | eng |
| Abstract: | This article investigates thea claim that debt finance can increase firm value by curtailing managers' access to "free cash flow". It shows that incentive contracts that tie the managers' pay to stockholder wealth are often a superior solution to the free cash flow problem. It then considers the possibility that the manager can trade on secondary capital markets. Liquid secondary markets are shown to undermine management incentive schemes and, in many cases, to restore the value of debt finance in controlling the free cash flow problem. |
SCIMA