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Banks vs. markets: are banks more effective in facilitating sustainability?

Newton, David P.; Ongena, Steven; Xie, Ru; Zhao, Binru - 2022

Is bank- versus market-based financing different in its attitudes towards Environmental, Social, and Governance (ESG … financing outcomes. We find that companies with higher ESG risk borrow less from banks than from markets, potentially to avoid … bank monitoring and scrutiny. The Social and Governance components, in particular, matter. Furthermore, firms suffering …

Persistent link: https://www.econbiz.de/10013169151

Frailty correlated default

Duffie, Darrell; Eckner, Andreas; Horel, Guillaume; … - 2008

We analyze portfolio credit risk in light of dynamic quot;frailty,quot; by which the credit qualities of different firms depend on common unobservable time-varying default covariates. Frailty is estimated to have a large impact on estimated conditional mean default rates, above and beyond those...

Persistent link: https://www.econbiz.de/10003966209

Debt renegotiation and investment decisions across countries

Favara, Giovanni; Morellec, Erwan; Schroth, Enrique J.; … - 2013

We argue that the prospect of an imperfect enforcement of debt contracts in default reduces shareholder-debtholder conflicts and induces leveraged firms to invest more and take on less risk as they approach financial distress. To test these predictions, we use a large panel of firms in 41...

Persistent link: https://www.econbiz.de/10010257850

Financing investment: the choice between bonds and bank loans

Morellec, Erwan; Valta, Philip; Zhdanov, Alexei - 2014

We build a model of investment and financing decisions to study the choice between bonds and bank loans in a firm …

Persistent link: https://www.econbiz.de/10010258730

Misvaluation and return anomalies in distress stocks

Eisdorfer, Assaf; Goyal, Amit; Zhdanov, Alexei - 2012

Return anomalies are most pronounced among distressed stocks. We attribute this finding to the role of misvaluation and investors' inability to value distressed stocks correctly. We treat distressed stocks as options and construct a valuation model that explicitly takes into account the value of...

Persistent link: https://www.econbiz.de/10009558395

Bankcruptcy law and firms' behavior

Epaulard, Anne (contributor); Pommeret, Aude (contributor) - 2007

The aim of this paper is to study the impact of the bankruptcy law on financing, investment, default and liquidation decisions of firms. We build a model in which the firm has the opportunity to get into debt to finance an investment whose return is stochastic. Shareholders and bondholders...

Persistent link: https://www.econbiz.de/10003549848

Relationship capital and financing decisions

Geelen, Thomas; Morellec, Erwan; Rostova, Natalia - 2021

Lending relationships matter for firm financing. In a model of debt dynamics, we study how lending relationships are formed and how they impact leverage and debt maturity choices. In the model, lending relationships evolve through repeated interactions between firms and debt investors. Stronger...

Persistent link: https://www.econbiz.de/10012612803

Limited liability and the demand for coinsurance by individuals and corporations

Bergesio, Andrea; Koch Medina, Pablo; Munari, Cosimo-Andrea - 2021

Within the context of expected utility and in a discrete loss setting, we provide a complete account of the demand for insurance by strictly-risk averse agents and risk-neutral firms when they enjoy limited liability. When exposed to a bankrupting, binary loss and under actuarially fair prices,...

Persistent link: https://www.econbiz.de/10012614542

Capital supply uncertainty, cash holdings, and investment

Hugonnier, Julien; Malamud, Semyon; Morellec, Erwan - 2011

We develop a model of investment, payout, and financing policies in which firms face uncertainty regarding their ability to raise funds and have to search for investors when in need of capital. We show that capital supply uncertainty leads firms to value financial slack and to adjust their...

Persistent link: https://www.econbiz.de/10009375158

Financing asset sales and business cycles

Arnold, Marc; Hackbarth, Dirk; Puhan, Tatjana-Xenia - 2014

Using a dynamic model of financing, investment, and macroeconomic risk, we investigate when firms sell assets to fund investments (financing asset sales) across the business cycle. Equity financed investment transfers wealth from equity to debt because asset volatility declines and earnings...

Persistent link: https://www.econbiz.de/10010337958