13. Agency costs (S17-2) In Section 17-2, we briefly referred to three games: playing for time, cash

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13. Agency costs (S17-2) In Section 17-2, we briefly referred to three games: playing for time, cash in and run, and bait and switch.

For each game, construct a simple numerical example (like the example for the risk-shifting game) showing how shareholders can gain at the expense of creditors. Then explain how the temptation to play these games could lead to costs of financial distress.

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Principles Of Corporate Finance

ISBN: 9781264080946

14th Edition

Authors: Richard Brealey, Stewart Myers, Franklin Allen, Alex Edmans

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