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The Effects of Business Cycle and Debt Maturity on a Firm's Investment and Default Decisions
Jeon, Haejun - 2017
We propose a model that jointly determines the capital structure and investment decisions taking business cycle and debt maturity into account. Namely, the firm can switch the diffusion regime of asset value, which involves switching costs, and the state of the economy that generates cyclical...
Persistent link: https://www.econbiz.de/10012973197
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Debt and Insolvency
Heaton, J.B. - 2020
about the design of debt contracts. The results derive from the premise that firms must avoid legal insolvency when issuing … new debt because insolvency at issuance would trigger severe operational limitations on the issuer. I first show that … legal insolvency limits debt capacity, limiting the amount of money that a firm can raise with debt. I next show that legal …
Persistent link: https://www.econbiz.de/10012852105
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Debt Dynamics and Default Probabilities
Hackbarth, Dirk - 2020
We derive a simple integral equation for the default probability over a finite time horizon of a company that makes coupon payments on its debt and infrequently returns to its leverage target by increasing its debt unless it defaults on its debt. Compared to the conventional (constant default...
Persistent link: https://www.econbiz.de/10012846065
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The Systemic Impact of Debt Default in a Multilayered Global Network Model
Porter, Nathan; Tovar, Camilo E.; Treviño, Juan; … - 2022
The world has become more interconnected over the past few decades. Against this backdrop, economic and financial contagion following adverse shocks can have a severe impact on the global economy. How systemic can the effects of contagion be? What specific transmission channels are involved?...
Persistent link: https://www.econbiz.de/10013491953
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Bankruptcy For the States and By the States
Triantis, George G. - 2012
In reaction to the fiscal difficulties experienced by state governments over the past three years, several politicians and academics proposed that Congress legislate a new chapter to the Bankruptcy Code under which the financial obligations of a state may be restructured. This essay is...
Persistent link: https://www.econbiz.de/10013113761
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Explaining Debt Recovery Using an Endogenous Bankruptcy Model
Suo, Wulin - 2013
Drawing on a large sample of defaulted corporate debt from 1996 to 2007, we find that the debt recovery estimated using the Leland-Toft endogenous bankruptcy model has strong explanatory power on the debt recovery observed in the market. Our results hold after firm characteristics, industry...
Persistent link: https://www.econbiz.de/10013090029
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Explaining Debt Recovery Using an Endogenous Bankruptcy Model
Suo, Wulin - 2019
Drawing on a large sample of defaulted corporate debt from 1996 to 2007, we find that the debt recovery estimated using the Leland-Toft endogenous bankruptcy model has strong explanatory power on the debt recovery observed in the market. Our results hold after firm characteristics, industry...
Persistent link: https://www.econbiz.de/10012906073
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Pre-Emptive Sovereign Debt Restructuring and Holdout Litigation
Anand, Kartik - 2019
We offer an analytical framework for studying "pre-emptive" debt exchanges. Countries can tailor a sovereign bankruptcy framework by choosing provisions (or "haircuts") ex ante, but must contend with the market discipline of holdout litigation ex post. Secondary markets play a role in shaping...
Persistent link: https://www.econbiz.de/10012898445
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Taxing Bankrupts
Oei, Shu-Yi - 2016
When a debtor goes bankrupt and limited assets have to be divided between competing creditors, should unpaid taxes owed to the government be paid before the debts owed to other creditors? This Article defends the notion that some tax debts should be awarded priority. Insofar as bankruptcy...
Persistent link: https://www.econbiz.de/10013007198
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Inside Debt and Recoveries in Bankruptcy
Pawliczek, Andrea - 2016
I examine the theoretical prediction that executive inside debt results in higher recoveries in bankruptcy. Using a sample of bankrupt firms, I find that supplemental executive retirement plans are positively associated with recoveries to unsecured debt in bankruptcy. Firms where CEOs have...
Persistent link: https://www.econbiz.de/10012995133