Date of Award
2015
Document Type
Dissertation
Publication Status
Version of Record
Submission Date
October 2026
Thesis/Dissertation Advisor [Chair]
Kohlbeck, Mark
Abstract
I investigate if all-equity firms are a heterogeneous group as it relates to agency costs and accounting quality. All-equity firms are a unique group of firms that choose a “corner solution” as their capital structure. Extant research, supported by well-established theories such as trade-off theory, free cash flow theory, and Jensen’s (1986) control hypothesis, generally conclude that agency conflicts motivate such structure. Research also supports the alternative argument that poor accounting quality makes debt so prohibitive that such firms are driven to this capital structure. I propose that an all-equity structure is not necessarily symptomatic of agency conflicts and poor accounting quality overall. I investigate if different motivations, within an all-equity setting, reflected by free cash flows and growth opportunities, result in different levels of agency cost and accounting quality. By anchoring on theories that link implicit costs of debt to free cash flow levels and growth opportunities, I hypothesize that free cash flows and growth opportunities are strongly linked to the justification or lack thereof for the pursuit of such strategy. I hypothesize and show that firms in the extremes of the free cash flow to growth rate spectrum exhibit significantly different levels of agency cost and accounting quality within the all-equity setting. These results support my main prediction that there exists agency costs and accounting quality differences within the all-equity setting which are associated with free cash flow levels and growth opportunities and that the pessimistic conclusions for pursuing an all-equity strategy reached by prior research should not be generalized to all such firms.
Extent
99 p.
Recommended Citation
Cabán, David, "Agency costs and accounting quality within an all-equity setting: the role of free cash flows and growth opportunities" (2015). Electronic Theses and Dissertations 2010 - 2019. 1162.
https://digitalcommons.fau.edu/etd_general_6/1162
Identifier
FA00004432
Comments
Includes bibliography.|Dissertation (Ph.D.)--Florida Atlantic University, 2015|FAU Electronic Theses and Dissertations Collection|Includes bibliography.