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- W3125969751 abstract "This paper studies optimal …nancial contracts and product market competition under a strategic transparency decision. When …rms seeking outside …nance resort to actively monitored debt in order to commit against opportunistic behaviour, the dominant lender can in‡uence corporate transparency. More transparency about a …rm’s competitive position has both strategic advantages and disadvantages: in general, transparency results in higher variability of pro…ts and output. Thus lenders prefer less information dissemination, as this protects …rms when in a weak competitive position, while equityholders prefer more disclosure to maximize pro…tability when in a strong position. We show that bank-controlled …rms will be opaque, while shareholder-run …rms prefer more transparency. In fact, we can predict a clustering of characteristics associated with bank dominance: opaqueness, low variability of pro…ts, slightly reduced average pro…ts, uncertainty about assets in place, and relatively high …nancing needs all should be observed jointly for bank controlled …rms." @default.
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- W3125969751 date "2001-01-01" @default.
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- W3125969751 title "Outside finance, dominant investors and strategic transparency" @default.
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