I am having some problems understanding the difference between shareholder-creditor conflict and debt-equity conflict.
I understand what the shareholder-creditor conflict is about, but when I try to understand debt-equity conflict I get to the conclusion that it is the same since
-> A shareholder owns a piece of the company in the form of stock (equity).
-> A creditor lends money to the company (debt)
I am asking because I am reading two articles where the main conflict of interest in the first article is shareholder-creditor conflict, but in the second article the main conflict is debt-equity..
- article: "The leverage ratchet effect" by Admati et. al. (2015)
- article: "A theory of LBO activity based on repeated debt-equity conflicts" by Andrey Malenko and Nadya Malenko (2015)