Bargaining Power Effects in Financial Contracting: A Joint Analysis of Contract Type and Placement Mode Choices

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The primary objective of this book is to demonstrate that a firm’s financing decisions depend among other things on bargaining power considerations, and to illustrate potential causes for this dependency. Based on a principal-agent analysis where a lender (principal) and a firm (agent) bargain over the financing of the firm’s risky project, the author illustrates and analyzes the importance of bargaining power on finance decisions.