Construct · 1 fields · 1 citations

asset substitution: a standalone construct

One name. One construct. A landmark on the map.

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Corporate finance

shareholders of a leveraged firm favoring riskier projects that transfer value from creditors, an agency cost of debt.

In corporate finance, asset substitution refers to shareholders of a leveraged firm favoring riskier projects that transfer value from creditors, an agency cost of debt. This meaning comes from Jensen (1976) in Journal of Financial Economics.[1]

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Nearby constructs

agency cost / principal-agent4 names · 5 citationsjangle · one delegation problem, many homes agency6 fields · 12 citationsjingle · one name, six constructs asset2 fields · 2 citationsjingle · one word, two constructs

References

Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305-360. https://doi.org/10.1016/0304-405x(76)90026-x

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