Final answer:
Creditors can affect a firm's decisions despite debt not carrying voting power, through covenants and informal influence over management, especially if the firm is at risk of defaulting on its obligations, which may lead to restructuring or bankruptcy.
Step-by-step explanation:
While it's true that debt does not carry voting power like equity, creditors can still influence a firm's decisions in various ways. For instance, creditors can impose certain covenants or restrictions that require the firm to maintain certain financial ratios, which then directly influence the firm's financial and operational decisions. Large creditors may also have informal influence over the company's management, leveraging the firm's dependency on their capital to sway decisions.
Moreover, if a company is at risk of not meeting its debt obligations, creditors can force it into a restructuring process that may involve significant changes to its operations and strategy. In extreme cases, if a company cannot service its debt, creditors can push the company into bankruptcy, during which they might convert debt into equity and potentially gain control of the firm's strategy and operations post-restructuring.