Economics traditionally has seen no difference between the rights of holders of debt and equity. Corporate governance holds a radically different view, drawing a sharp line between debt and equity. Shareholders, as the residual owners, hold the reins of power, while creditors’ rights mainly take the form of a tripwire, a right to call their loans in the event of default.
Recent work has called this conventional wisdom into question.
Creditors now typically insist on elaborate covenants that give them control over the firm, especially when the firm encounters hard times. In many situations, creditors may wield even greater power over the firm than the shareholders.
These dynamics of creditor control and the empirical study of them mark a recent trend in scholarship in both law and finance, moving beyond traditional corporate finance research that has focused almost exclusively on the relationship between boards and shareholders.
This conference served a twofold purpose. First, to connect the academics in finance, economics, and law who have focused on this issue, and but also provide a chance to introduce these issues to those academics interested in corporate finance to this new area of research.
The conference was sponsored by the institute's Andrew and Betsy Rosenfield Program in Economics, Public Policy, and Law with support from the Coase-Sandor Institute for Law and Economics.
September 11, 2014 (All day) – September 12, 2014 (All day)