Marketable Incentive Contracts and Capital Structure Relevance.

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Garvey, Gerald T;
  • Journal: Journal of Finance, volume 52, issue 1 March, pages 353-78

This article investigates the claim that debt finance can increase firm value by curtailing managers' access to 'free cash flow.' The author first shows that incentive contracts that tie the managers' pay to stockholder wealth are often a superior solution to the free c... View more
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