Showing 1 - 10 of 457
Credit market freezes in which debt issuance declines dramatically and market liquidity evaporates are typically … bonds declined, and secondary credit markets became highly illiquid. In this paper we analyze liquidity in bond markets … during financial crises and compare two main theories of liquidity in markets: (1) asymmetric information and adverse …
Persistent link: https://www.econbiz.de/10012954001
This paper proposes a theory of liquidity dynamics. Illiquidity results from asymmetric information. Observing the … perpetuates illiquidity. Liquidity falls in response to unexpected events that lead agents to question their valuation models …
Persistent link: https://www.econbiz.de/10013023683
We examine how liquidity and asset prices are affected by the following market imperfections: asymmetric information …
Persistent link: https://www.econbiz.de/10013151396
Using information on the sales of debt claims for 132 U.S. Chapter 11 bankruptcy cases, we show that large trade creditors' decisions to sell receivables of a distressed company in bankruptcy are predictive of lower recovery rates, and that in such cases these creditors sell ahead of less...
Persistent link: https://www.econbiz.de/10012928983
This paper builds on the landmark contribution of Glosten (1994) by treating the determination of limit order supply schedules as an exercise in asset pricing theory with the possible sizes of incoming market orders as the value-relevant states of nature, yielding an analogue of the Fundamental...
Persistent link: https://www.econbiz.de/10012772385
We investigate the idea that stock-market participation is influenced by social interaction. We build a simple model in which any given 'social' investor finds it more attractive to invest in the market when the participation rate among his peers is higher. The model predicts higher...
Persistent link: https://www.econbiz.de/10012787652
liquidity-constrained debtors will respond by enough to make a reduction in debt profitable, but not by enough to make the …
Persistent link: https://www.econbiz.de/10013231587
In this paper, we examine a supply chain in which a single supplier sells to a downstream newsvendor-type retailer. We make two assumptions that enrich this simple and well-understood model. First, we consider a multi-period model, in which the sequence of events is as follows. In a period, t,...
Persistent link: https://www.econbiz.de/10014047671
A central result in the economic theory of liability is that, if an injurer's liability equals the victim's loss, then either the rule of strict liability or the rule of negligence can induce the injurer to behave properly. However, for this result to hold, the injurer must know the victim's...
Persistent link: https://www.econbiz.de/10014103716
We develop a theory of optimal financing for R&D-intensive firms that uses their unique features—large capital outlays, long gestation periods, high upside, and low probabilities of R&D success—that explains three prominent stylized facts about these firms: their relatively low use of debt,...
Persistent link: https://www.econbiz.de/10012947632