Footnote:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments March 15, 2011 erstellt
Description:
This paper explores the relationship between creditor rights and employee rights and capital structure across countries. Using country-level creditor rights index and labor rights index as a proxy for agency costs of creditors and agency costs of employees, respectively, I address the agency costs of creditors and employees. I find a positive relationship between employee rights and firms' use of debt. This is because when employee rights are high, shareholders intend to use more debt obligation to remove free cash flows so as to reduce employees' opportunities to obtain more benefits from the corporation. I also document a negative relationship between creditor rights and firm debt ratio. When creditor rights are high, creditors have more negotiation power to obtain good terms in debt contracting. If shareholders cannot get a favorable debt contract, they are likely to reduce the use of debt capital