We use a dynamic model of financing decisions to measure agency conflicts for a large panel of 12,652 firms from 14 countries. Our estimates show that agency conflicts are large and vary significantly across firms and countries. Differences in agency conflicts are largely due to differences in...

The financial crisis that began in the United States in 2007 and spread into a deep worldwide recession focused attention on agency costs in leveraged firms. Particular attention was given to the incentives of shareholders in such firms to overinvest (known as the "risk-shifting" problem) or...