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The Liquidity Cost of Private Equity Investments : Evidence from Secondary Market Transactions

Nadauld, Taylor D. - 2016

from a leading intermediary to understand the magnitude and determinants of transaction costs in this market. Most …

Persistent link: https://www.econbiz.de/10012987121

He, Zhiguo - 2010

This paper models a firm's rollover risk generated by conflict of interest between debt and equity holders. When the firm faces losses in rolling over its maturing debt, its equity holders are willing to absorb the losses only if the option value of keeping the firm alive justifies the cost of...

Persistent link: https://www.econbiz.de/10013148863

Cash Holdings and Credit Risk

Acharya, Viral V. - 2011

Intuition suggests that firms with higher cash holdings are safer and should have lower credit spreads. Yet empirically, the correlation between cash and spreads is robustly positive and higher for lower credit ratings. This puzzling finding can be explained by the precautionary motive for...

Persistent link: https://www.econbiz.de/10013125920

Financial Distress in the Great Depression

Graham, John R. - 2015

NYSE. Our goal is to identify the factors that contribute to business insolvency and valuation changes during the period …

Persistent link: https://www.econbiz.de/10013037628

Zombie Lending and Depressed Restructuring in Japan

Caballero, Ricardo J. - 2010

In this paper, we propose a bank-based explanation for the decade-long Japanese slowdown following the asset price collapse in the early 1990s. We start with the well-known observation that most large Japanese banks were only able to comply with capital standards because regulators were lax in...

Persistent link: https://www.econbiz.de/10012761673

No-Fault Default, Chapter 11 Bankruptcy, and Financial Institutions

Merton, Robert C.; Thakor, Richard T. - 2022

This paper analyzes the costs and benefits of a no-fault-default debt structure as an alternative to the typical … bankruptcy process. We show that the deadweight costs of bankruptcy can be avoided or substantially reduced through no … world. We show that potential costs introduced by this scheme due to risk shifting can be attenuated via convertible debt …

Persistent link: https://www.econbiz.de/10013403249

Bankruptcy and the Collateral Channel

Benmelech, Efraim - 2010

Do bankrupt firms impose negative externalities on their non-bankrupt competitors? We propose and analyze a collateral channel in which a firm's bankruptcy reduces collateral values of other industry participants, thereby increasing the cost of external debt finance industry wide. To identify...

Persistent link: https://www.econbiz.de/10013148372

Optimal Taxation in the Presence of Bailouts

Panageas, Stavros - 2010

The termination of a representative financial firm due to excessive leverage may lead to substantial bankruptcy costs … liquidation and the associated deadweight costs. It is shown that the optimal taxation policy to finance such transfers exhibits …

Persistent link: https://www.econbiz.de/10013150643

Optimal Debt and Profitability in the Tradeoff Theory

Abel, Andrew B. - 2015

I develop a dynamic model of leverage with tax deductible interest and an endogenous cost of default. The interest rate includes a premium to compensate lenders for expected losses in default. A borrowing constraint is generated by lenders' unwillingness to lend an amount that would trigger...

Persistent link: https://www.econbiz.de/10013015555

Pledgeability, Industry Liquidity, and Financing Cycles

Diamond, Douglas W. - 2017

Why do firms choose high debt when they anticipate high valuations, and underperform subsequently? We propose a theory of financing cycles where the importance of creditors' control rights over cash flows (“pledgeability”) varies with industry liquidity. The market allows firms take on more...

Persistent link: https://www.econbiz.de/10012965425