caa a22 4500 386308934 CHVBK 20180307111538.0 cr unu---uuuuu 161130e198803 xx s 000 0 eng 10.2307/2331022 doi S0022109000012904 pii (NATIONALLICENCE)cambridge-10.2307/2331022 Bankruptcy and Agency Costs: Their Significance to the Theory of Optimal Capital Structure [Elektronische Daten] We support and generalize our original results (1978) in light of potential impediments to a pure market solution to agency problems and potential causal links between liquidation and bankruptcy. In the case of bankruptcy costs, market impediments are easily eliminated through the inclusion of simple provisions in corporate charters and bond indentures. Further, we demonstrate that recent attempts to link liquidation costs to capital structure are without merit. If the firm is to be liquidated on the basis of a rule other than one that maximizes the total value of all the claimants, arbitrage profits arise, and informal reorganization will discipline management to follow the liquidation rule that is optimal for existing securityholders. Also, we find that the pure market solution is not readily generalizable to other classes of agency problems, particularly the risk incentive problem. However, the alternative solution of the risk incentive problem through complex financing contracting may be useful in explaining complexities in contemporary financial contracts. Copyright © School of Business Administration, University of Washington 1988 Haugen Robert A. Senbet Lemma W. Journal of Financial and Quantitative Analysis Cambridge University Press 23/1(1988-03), 27-38 0022-1090 23:1<27 1988 23 JFQ https://doi.org/10.2307/2331022 text/html Onlinezugriff via DOI 1 research-article jats NATIONALLICENCE 856 40 https://doi.org/10.2307/2331022 text/html Onlinezugriff via DOI NATIONALLICENCE 700 1- Haugen Robert A. NATIONALLICENCE 700 1- Senbet Lemma W. NATIONALLICENCE 773 0- Journal of Financial and Quantitative Analysis Cambridge University Press 23/1(1988-03), 27-38 0022-1090 23:1<27 1988 23 JFQ CC0 http://creativecommons.org/publicdomain/zero/1.0 nationallicence BK010053 XK010053 XK010000 NATIONALLICENCE NATIONALLICENCE NL-cambridge