We present a model that shows how interactions between creditor groups in bankruptcy can affect the debt issuance decisions of firms. In particular, we suggest that deviations from APR should be priced and can affect the issuing decisions of junior and senior debt. Our model suggests that once...

This paper investigates the optimal sequencing of debt issues. Our theoretical model suggests that once firms issue debt with one level of seniority, they may have an incentive to alternate seniorities, because of priced absolute priority rule (APR) violations. When we introduce explicit costs...

We present a model that shows how interactions between creditor groups in bankruptcy can affect the debt issuance decisions of firms, and test the most important implications of the theory. In particular, we show that firms that issue debt with a specific seniority level may tend to keep issuing...

We present a model that shows how interactions between creditor groups in bankruptcy can affect the debt issuance decisions of firms. In particular, we show that firms that issue debt with a specific seniority level may tend to keep issuing debt at the same level to avoid the costs of conflicts...

We present a model that shows how interactions between creditor groups in bankruptcy can affect the debt issuance decisions of firms. In particular, we show that firms that issue debt with a specific seniority level may tend to keep issuing debt at the same level to avoid the costs of conflicts...