Small firms that do not have access to organized financial markets must often rely on secured commercial loans for their debt financing. In large firms, debt-related agency problems are often resolved through the bond pricing process in the formal debt markets. When these same debt-related agency problems arise in small, private firms, the structure of the secured lending agreement must resolve these problems. This study identifies debt-related agency problems as they exist in private firms and examines howf the lending agreement resolves these problems.
Asset Based Lending, ABL, Agency Problem
Constand, Richard L.; Osteryoung, Jerome S.; and Nast, Donald A.
"Revolving Asset-Based Lending Contracts and the Resolution of Debt-Related Agency Problems,"
Journal of Small Business Finance:
1, pp. 15-28.
Available at: http://digitalcommons.pepperdine.edu/jef/vol1/iss1/3