Titman, Sheridan; Tompaidis, Stathis; Tsyplakov, Sergey - In: Journal of Finance 59 (2004) 1, pp. 165-205
This paper develops a structural model that determines default spreads in a setting where the debt's collateral is endogenously determined by the borrower's investment choice, and a demand variable with permanent and temporary components. We also consider the possibility that the borrower cannot...