Blazy, Régis; Weill, Laurent - Centre Emile Bernheim, Solvay Brussels School of … - 2007
This research investigates how bankruptcy law influences the design of debt contracts and the investment choice through … sanctions are implemented in case of costly bankruptcy only. This way of resolving financial distress can be avoided yet, if a … private agreement is achieved. First, – when sanctions are high – we show that costly bankruptcy may be preferred by honest …