Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/94143
Authors: 
Akbel, Basak
Schnitzer, Monika
Year of Publication: 
2009
Series/Report no.: 
SFB/TR 15 Discussion Paper 304
Abstract: 
We analyze the optimal debt structure of multinational corporations choosing between centralized or decentralized borrowing. We identify how this choice is affected by creditor rights and bankruptcy costs, taking into account managerial incentives and coinsurance considerations. We find that partially centralized borrowing structures are optimal with either weak or strong creditor rights. For intermediate levels of creditor rights fully decentralized (centralized) borrowing structures are optimal if managers have strong (weak) empire building dencies. Decentralized borrowing is more attractive for companies focussing on short-term profitability. Credits are rather taken in countries with better creditor rights and more efficient insolvency systems.
Subjects: 
Multinational corporations
capital structure
creditor rights
coinsurance
internal capital markets
JEL: 
G32
F23
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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