In a market-based financial system, credit is held by dispersed creditors, and out-of-court renegotiation of debt is more likely to fail because of hold-out problems; in a bank-based system, out-of-court renegotiation stands good chances to succeed. Since out-of-court renegotiation is a...

We conduct a theoretical and empirical investigation of the impact of bankruptcy codes on firms’ capital-structure choices. In our theoretical framework, costs of financial distress are endogenously determined as a function of the bankruptcy code. Anticipated liquidation values emerge as the...

An increasing body of literature discusses how and to which extent the financial crisis of 2007-2009 transmits to the real economy. This paper investigates the impact of the financial crisis of 2007-2009 on corporate investment, in particular research and development (R&D) expenditures. We...

We provide evidence that existing studies relating financial condition to product market cooperation produce mixed results because of unique features of the industries examined. In particular, all evidence suggesting that poor financial condition decreases cooperation comes from the airline...

We show that the relative seniority of debt and managerial compensation has important implications on the design of remuneration contracts.Whereas the traditional literature assumes that debt is senior to remuneration, we show that this is frequently not the case according to bankruptcy...

The paper presents some of the most relevant score functions developed worldwide, used to assess the bankruptcy risk. Among these, we mention the Altman model, developed in 1968, the model elaborated by the Central Bank of France, by Conan and Holder, or by Ohlson. Also, we present the models...

The paper presents some of the most relevant score functions developed worldwide, used to assess the bankruptcy risk. Among these, we mention the Altman model, developed in 1968, the model elaborated by the Central Bank of France, by Conan and Holder, or by Ohlson. Also, we present the models...

For 366 large non-financial U.K. firms, this paper reports the factors that are important in determining their decision to hedge foreign currency exposure. The results provide strong evidence of a relationship between expected financial distress costs and the foreign currency hedging decision...

In this paper, we compare the equity returns of dividend-paying and non-dividend paying firms. We find no unconditional return difference even though non-dividend paying firms have many characteristics that suggest high risk. Equivalently, because non-dividend paying firms have high...