Capital Structure, Managerial Incentives and Corporate Governance

by Christian Pfeil (Author)
Thesis 204 Pages
Series: Entwicklung und Finanzierung, Volume 9


What factors determine a firm’s financing decision? Informational economics and contract theory have contributed a great deal to answer this question. This book contains three essays that further contribute to this strand of literature with the focus on theories that view capital structure as a disciplining instrument for a self-interested management. Some of the existing theories abstract from other disciplining devices such as ordinary incentive wages to justify debt as a mean to mitigate a moral hazard problem between managers and owners of a firm. Two of the models presented here turn to the question of whether debt can play a role as an incentive device when other incentive mechanisms are available as well. A third model revisits the signaling literature on capital structure in the light of new empirical evidence. All models are embedded into a corporate governance framework that allows to set the conclusions into a broader perspective.


ISBN (Softcover)
Frankfurt/M., Berlin, Bern, Bruxelles, New York, Oxford, Wien, 2002. 203 pp.

Biographical notes

Christian Pfeil (Author)

The Author: Christian Pfeil studied economics at University of Saarland, Germany and University of Michigan, Ann Arbor, USA from 1990 to 1995. After graduation in 1995 he joined the chair of Prof. J. Eichberger (Mathematical Economics) at University of Saarland as a Ph.D. student. Upon finishing his dissertation in 1999 he visited the Department of Economics at University of Melbourne, Australia. During this visit he taught a course in organizational theory and contract theory. In February 2000 Christian Pfeil joined chair of Prof. R. H. Schmidt (International Banking and Finance) in the Department of Finance at J. W. Goethe University, Frankfurt, Germany. Since January 2001 he is Head of Division – Financial and Federal Affairs – at Staatskanzlei of the Saarland, Germany.


Title: Capital Structure, Managerial Incentives and Corporate Governance