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This paper was originally written in October 2005 and revised in February 2000.

Download the Paper (253 K, PDF file) - February 1, 2000 Tell a colleague about it. Printing Tips: Select 'print as image' in the Acrobat print dialog if you have trouble printing.

ABSTRACT:
This article investigates which companies finance themselves through intermediaries and which borrow directly from arm's length investors. Our empirical results show that large companies with abundant cash and collateral tap credit markets directly; these markets cater to safe and profitable industries, and are most active when riskless rates or intermediary earnings are low. We show that determinants of lender selection sharpen during investment downturns and that there are substantial asymmetries in the way firms enter and exit capital markets. These results support a theoretical framework where intermediaries have better reorganizational skills but a higher opportunity cost of capital than bondholders.

SUGGESTED CITATION:
Miguel Cantillo and Julian Wright, "HOw Do Firms Choose Their Leaders? An Empirical Investigation" (February 1, 2000). Research Program in Finance Working Papers. Paper RPF-256-Rev.
http://repositories.cdlib.org/iber/finance/RPF-256-Rev