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Given the fact that debt has to be repaid and interest has to be paid, having corporate debt on the balance sheet forces managers to provide enough cash flows to service the debt obligations. Thus, these cash flows go to the debt holders and cannot be used for perks for the managers or for unprofitable empire building. Furthermore, debt covenants can restrict managers in their (self interest maximizing) decisions. Finally, if debt is provided by a large e.g. institutional lender, this lender may have such a large stake in the firm that the lender acts as a valuable monitor
What else can I help you with?
What is a court-granted permission to an individual or business to cease or delay debt payments called?
A court-granted permission to an individual or business to cease or delay debt payments is called a "stay" or "automatic stay." This legal mechanism is often implemented during bankruptcy proceedings, providing temporary relief from creditors and halting collection activities. It allows the debtor time to reorganize their finances without the immediate pressure of debt repayment.
What is meant by the interest coverage ratio?
The interest coverage ratio is the calculation that determines a company's ability to repay debt payments. It is this calculation that determines whether or not companies are able to obtain loans.
When a corporation or government entity issue debt in exchange for funds?
When a corporation or government entity issues debt, it typically does so by selling bonds or other debt instruments to investors in exchange for funds. This process allows the issuer to raise capital for various purposes, such as financing projects, expanding operations, or managing existing debt. Investors receive interest payments over time and the principal amount back at maturity, making it a way for the issuer to secure funding while providing a return to investors. Ultimately, this mechanism facilitates capital flow in the economy.
What is the fine line difference between commercial debt and consumer debt?
Consumer debt is governed by the FDCPA....commercial debt is not.
What services do Debt Relief of America provide?
They offer debit consolidation loans, debt settlement, debt management, and debt negotiation services to help people manage their debt payments so they can one day get out of debt.
What is meant by DSCR.?
Debt Service Coverage Ratio
Are debt calculators accurate?
Debt calculators are only an estimate but they are fairly accurate. They are meant to give you an idea of your debt and income ratio and what you can or cannot afford.
What is dept in a sentence?
Dept is a shortening of the word, department.In case you meant debt?Harry was so much in debt, he was in total despair.
What is meant by a pledge?
A pledge is a promise or a agreement to do something. It also can be a payment of debt.
What is meant by the statement restlessness is the father of classroom disciplinary problems?
This statement suggests that when students feel restless or bored in the classroom, they are more likely to act out or misbehave. Restlessness can lead to a lack of engagement with the material being taught, which can result in disruptive behavior and disciplinary issues. Addressing students' restlessness with engaging activities and teaching methods can help prevent classroom disciplinary problems.
What is meant by this statement restlessness is the father of classroom disciplinary problems?
This statement suggests that when students are restless or bored in the classroom, they are more likely to exhibit disciplinary issues as a way to cope with their lack of engagement. Addressing restlessness through engaging lessons and activities can help prevent such problems from arising.
How are homeopathic remedies meant to work?
Homeopathic remedies are meant to help the body "fix" or "cure" itself. These remedies trigger the bodies own mechanism. These remedies are not meant to replace main stream medications.
Who owed the huge debt left over from the American revolution?
if who ever wrote this meant how did Britain pay there war debt .ANSWER IS : they used taxes to pay for it
What is the present tense of deat?
The word "deat" appears to be a typo or a misunderstanding. If you meant "debt," it does not have a present tense as it is a noun. If you meant "die," the present tense is "dies." Please clarify if you meant a different word!
What do you mean disciplinary measures used in organization?
What do you mean disciplinary measures used in organization?
When was US Disciplinary Barracks created?
United States Disciplinary Barracks was created in 1874.
When was The Future Is Inter-Disciplinary or Not at All created?
The Future Is Inter-Disciplinary or Not at All was created in 2006.
