The optimal concentration of creditors

Deskripsi

Our model assumes that creditors need to expend resources to collect on claims. Consequently, because diffuse creditors suffer from mutual free-riding ( Holmstrom ( 1982 ) ), they fare worse than concentrated creditors ( e.g., a house bank ). The model predicts that measures of debt concentration relate positively to creditors' (aggregate) debt collection expenditures and positively to management's chosen expenditures to resist paying..Printed Journal