Essays on Creditor Rights Protection, Corporate Debt and Corporate Liability
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This dissertation examines how information asymmetry and bankruptcy costs magnify the conflict between creditors and borrowers. And the conflict between creditors and managers.The central idea of this dissertation is that in order for credit to be extended there has to be some effective mechanisms in place. These mechanisms would ensure that creditors can recoup their claims even in the case of bankruptcy. Examples of such mechanisms would be legal reforms, such reforms would facilitate enforceability of contracts and minimize conflict amongst contractual parties. In order to understand how these conflicts arise and to quantify their welfare implications, this dissertation exploits changes in institutional settings, laws, Anti-Recharacterization laws, legal reforms and differential in corporate governance structure.