add to favorites : reference url back to results : previous : next
 

SECURITY DESIGN THAT ADDRESSES AGENCY CONFLICTS AND INFORMATION ASYMMETRY
Access this item.
TitleSECURITY DESIGN THAT ADDRESSES AGENCY CONFLICTS AND INFORMATION ASYMMETRY
AuthorTewari, Manish
Keywordscallable
puttable
bonds
security
pricing
agency
conflicts
information
asymmetry
AbstractThis study focuses on the role of structured derivative securities to meet diverse corporate financing objectives in the light of agency theory and asymmetric information. The focus is on the nonconvertible callable-puttable fixed-coupon bonds. The primary objective is to discern the marginal role of the put and put-deferred features in addressing the agency issues and asymmetric information. A sample of (159) securities issued over the period (1977-2005) are examined using Merton's (1974) structural contingent claims valuation model. The put option as well as the deferred put option incorporated in these securities is found to mitigate the asset substitution issue. It is also found that these contract features provide considerable insurance against the asymmetric information about the firm's downside risk. Specifically, the effects of asset substitution are mitigated because the put option reduces sensitivity of the security's value to the changes in the firm's volatility. Prior to this study, this effect was believed to be driven primarily by the conversion feature in the convertible bonds and the preferred stocks. In addition, the long-term performance of the underlying common stock indicates systematic negative performance for the protracted periods both prior and subsequent to the issuance, yet it is found that this decline in the equity value has only a limited negative impact on the security.
AdviserSchnitzlein, Charles
PublisherUniversity of Central Florida
DegreePh.D.
Degree DisciplineDepartment of Finance
Degree GrantorBusiness Administration
Degree ProgramBusiness Administration PhD
Graduation Date2008-01-01
TypeDoctoral dissertation
Access LevelPublic - Allow Worldwide Access
Release Date2008-12-20
RepositoryUniversity Archives
Repository CollectionElectronic Theses and Dissertations
IdentifierCFE0002424
Access Linkhttp://purl.fcla.edu/fcla/etd/CFE0002424

add to favorites : reference url back to results : previous : next
powered by CONTENTdm ® | contact us  ^ to top ^