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Cross-Monitoring And Corporate Governance, Joanna M. Shepherd, Frederick Tung, Albert H. Yoon
Cross-Monitoring And Corporate Governance, Joanna M. Shepherd, Frederick Tung, Albert H. Yoon
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We take the view that corporate governance must involve more than corporate law. Despite corporate scholars' nearly exclusive focus on corporate law mechanisms for controlling managerial agency costs, shareholders are not the only constituency concerned with such costs. Given the thick web of firms' contractual commitments, it should not be a surprise that other financial claimants may also attempt to control agency costs in their contracts with the firm. We hypothesize that this cross-monitoring by other claimants has value for shareholders.
We examine bank loans for empirical evidence of the value of cross-monitoring. Our approach builds on prior empirical work …