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The trading response of individual investors to local bankruptcies

Laudenbach, Christine; Loos, Benjamin; Pirschel, Jenny; … - 2020

We use data from a German online brokerage and a survey to show that retail investors sharply reduce risk-taking in response to nearby firm bankruptcies, which are not predictive of returns. The effects on trading are spatially highly concentrated, immediate and not persistent. They seem to...

Persistent link: https://www.econbiz.de/10012195959

Illiquidity and under-valuation of firms

Gale, Douglas; Gottardi, Piero - 2009

We study a competitive model in which market incompleteness implies that debt-financed firms may default in some states of nature and default may lead to the sale of the firms' assets at fire sale prices when markets are illiquid. This incompleteness is the only friction in the model and the...

Persistent link: https://www.econbiz.de/10003923631

Credit risk in general equilibrium

Eichberger, Jürgen; Rheinberger, Klaus; Summer, Martin - 2014

This paper contributes to the literature on default in general equilibrium. Borrowing and lending takes place via a clearing house (bank) which monitors agents and enforces contracts. Our model develops a concept of bankruptcy equilibrium that is a direct generalization of the standard general...

Persistent link: https://www.econbiz.de/10010235825

Disagreement and optimal security design

Ortner, Juan M.; Schmalz, Martin C. - 2018

We study optimal security design when the issuer and market participants agree to disagree about the characteristics of the asset to be securitized. We show that pooling assets can be optimal because it mitigates the effects of disagreement between issuer and investors, whereas tranching a...

Persistent link: https://www.econbiz.de/10011795041

How much do means-tested benefits reduce the demand for annuities?

Bütler, Monika; Peijnenburg, Kim; Staubli, Stefan - 2011

We analyze the effect of means-tested benefits on annuitization decisions. Most industrialized countries provide a subsistence level consumption floor in old age, usually in the form of means-tested benefits. The availability of such means-tested payments creates an incentive to cash out...

Persistent link: https://www.econbiz.de/10009153835

Collective risk-taking decisions with heterogeneous beliefs

Gollier, Christian - 2003

Suppose that a group of agents having divergent expectations can share risks efficiently. We examine how this group should behave collectively to manage these risks. We show that the beliefs of the representative agent is in general a function of the group.s wealth level, or equivalently, that...

Persistent link: https://www.econbiz.de/10011507677

Overconfidence in investment decisions : an experimental approach

Dittrich, Dennis; Güth, Werner; Maciejovsky, Boris - 2001

We experimentally test overconfidence in investment decisions by offering participants the possibility to substitute their own for alternative investment choices. Overall, 149 subjects participated in two experiments, one with just one risky asset, the other with two risky assets. Overconfidence...

Persistent link: https://www.econbiz.de/10011408444

Debt recovery in firm liquidations : do liquidation trustees matter?

Cepec, Jaka; Grajzl, Peter; Zajc, Katarina - 2016

Insolvency systems play a crucial role in protection of creditor rights, yet micro-level empirical evidence on the … functioning of insolvency regimes worldwide is sparse. We investigate whether creditors' recovery of outstanding claims, a measure … of ex-post efficiency of an insolvency regime, depends on the characteristics of the trustee delegated the administration …

Persistent link: https://www.econbiz.de/10011518156

The impact of delay : evidence from formal out-of-court restructuring

Srhoj, Stjepan; Kovač, Dejan; Shapiro, Jacob N.; … - 2021

Bankruptcy restructuring procedures are used in most legal systems to decide the fate of businesses facing financial hardship. We study how bargaining failures in such procedures impact the economic performance of participating firms in the context of Croatia, which introduced a "pre-bankruptcy...

Persistent link: https://www.econbiz.de/10012603137

Advantageous smallness in contests

Amegashie, J. Atsu - 2021

A standard result in contests is that a higher-ability player has a higher probability of winning the prize than a lower-ability player. Put differently, a stronger player has an advantage over a weaker player in a contest. There are very few exceptions to this standard result. I consider a...

Persistent link: https://www.econbiz.de/10012669006

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