Agency issues with dual claim investors.

摘要

This dissertation investigates the agency issues related with dual claim investors. It studies how the presence of dual claim bank holding companies affects the agency conflicts between shareholders and debtholders and the agency conflicts among creditors under different corporate opacity environments.; First, we investigate how dual claim investors affect firm performance. We document that dual claim holdings of equity and debt by bank holding companies present in over 20 percent of the Russell 3000 firms. Consistent with a wealth transfer hypothesis, we find that, in banks with relatively small equity claims, (a) shareholder value is significantly lower in firms with dual claim investors, and (b) shareholder losses in firms with dual claim banks are a function of the relative size of the debt and equity stakes held by the bank. The presence of these dual claim investors is related to greater firm performance as the magnitude of the hank's equity claim approaches the size of their debt claim.; Second, we investigate the effects of bank equity ownership in publicly traded firms on the cost of public debt. Our analysis reveals that (a) public debt holders charge fewer premiums as lending banks hold equity in their borrowers, and (b) only limited dual claim bank holding company equity ownership helps to reduce public debt costs; while extensive equity held by dual claim bank holding companies appears to increase the potential interest conflicts among debt claimants.; Third, we investigate how the presence of dual claim bank holding companies affects firm performance differently under various corporate opacity environments. We document that (a) firms with dual bank claims are more (less) opaque when the size difference of claim positions is high (low), (b) firms perform badly in most opaque environments and the low market valuation turns worse at the presence of dual claim banks, (c) firms perform well in most transparent environments and the high market valuation is not alleviated by dual claim banks. Overall, our results indicate that firms perform worse in opaque environments and such discounts on market valuation are exacerbated at the presence of dual claim banks.