When Do Banks Take Equity in Debt Restructurings?
This article examines the conditions under which bank lenders make concessions by taking equity in financially distressed firms. I show that the role banks play in debt restructurings depends on the financial condition of the firm, the existence of public debt in the firm's capital structure and the ability of public debt to be restructured. Empirically, I find that for firms with public debt outstanding, banks never make concessions unless public debtholders also restructure their claims. When banks do take equity, on average they obtain a substantial proportion of the firm's stock, and they maintain their position for over two years. Article published by Oxford University Press on behalf of the Society for Financial Studies in its journal, The Review of Financial Studies.
Year of publication: |
1995
|
---|---|
Authors: | James, Christopher |
Published in: |
Review of Financial Studies. - Society for Financial Studies - SFS. - Vol. 8.1995, 4, p. 1209-34
|
Publisher: |
Society for Financial Studies - SFS |
Saved in:
Online Resource
Saved in favorites
Similar items by person
-
The Technology of Risk and Return: Comment.
James, Christopher, (1981)
-
The use of bank lines of credit in corporate liquidity management: A review of empirical evidence
Demiroglu, Cem, (2011)
-
Is board composition a substitute for an active takeover market in banking?
Brickley, James, (1986)
- More ...