Debt–Equity Conflicts and Efficiency of Distressed Firms: Evidence from Japanese Banker-Directors
研究日本银行派驻董事如何缓解财务困境企业的债务-股权冲突，减少过度投资和投资不足，但可能对其他利益相关者产生溢出效应。
Abstract This study provides direct evidence of the association between debt–equity conflict and investment efficiency in financially distressed firms. Leveraging a unique institutional setting in Japan, we examine the impact of lender-affiliated directors on the managerial decisions of their borrowers. Although banker-directors do not influence firms at low risks of default, their presence leads to more conservative financial decisions in distressed firms, thereby mitigating shareholder exploitation. They also reduce information frictions to prevent overinvestment and underinvestment. However, despite within-firm efficiency gains, potential spillover effects on other stakeholders raise questions about the broader welfare implications of this debt–equity conflict mitigation.