Christensen, Peter Ove; Flor, Christian Riis; Lando, David - In: Journal of Corporate Finance 29 (2014) C, pp. 644-661
We consider a dynamic trade-off model of a firm's capital structure with debt renegotiation. Debt holders only accept restructuring offers from equity holders backed by threats which are in the equity holders' own interest to execute. Our model shows that in a complete information model in which...