Why might nonowner managers of a firm be motivated

Reference no: EM131245625

Galai and Masulis argue that if two firms merge and thus decrease the probability of default on their debt along the lines of Lewellens scenario, then the stockholders are actually hurt, since they have assumed some of the risk previously borne by the bondholders.

Why might nonowner managers of a firm be motivated to transfer risk from bondholders to stockholders in this manner?

Reference no: EM131245625

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