Constand, Richard L. Osteryoung, Jerome S. Nast, Donald A.
Year of Publication:
[Journal:] Journal of Small Business Finance [ISSN:] 1057-2287 [Volume:] 1 [Year:] 1991 [Issue:] 1 [Pages:] 15-28
Small firms that do not have access to organized financial markets must often rely on secured commercial loans for their debt financing. In large firms, debt-related agency problems are often resolved through the bond pricing process in the formal debt markets. When these same debt-related agency problems arise in small, private firms, the structure of the secured lending agreement must resolve these problems. This study identifies debt-related agency problems as they exist in private firms and examines howf the lending agreement resolves these problems.