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In case of multiple creditors a coordination problem can arise when the borrowingfirm runs into financial distress …. Even if the project's value at maturity is enoughto pay all creditors in full, some creditors may be tempted to foreclose … on theirloans. We develop a model of creditor coordination where a large creditor movesbefore a continuum of small …
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creditors the option to delay their foreclosure decision rather than obliging them to simultaneous actions as suggested by … diminishes creditor coordination failure whenever the firm is expected to be in distress. -- global games ; creditor coordination …
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positive association when financial reporting quality or investor sophistication is low. While creditors price both pessimistic …
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Corporate ratings remove the information asymmetry between lenders and borrowers to find an equilibrium price. Structured credit ratings, however, are informationally insufficient because the systematic risk of equally rated assets can vary substantially. As I demonstrate, highly-rated...
Persistent link: https://www.econbiz.de/10012937290
During the past forty years, the simultaneous, symbiotic growth of financial innovation, disintermediation and deregulation has created an environment with extremely complex, opaque investment instruments. That system has now collapsed. At the very center of the crisis are a small group of...
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effects of bankruptcy announcements on creditors using a unique database. On average, creditors experience severe negative … abnormal equity returns and increases in CDS spreads. In addition, creditors are more likely to suffer from financial distress … later. These effects are stronger for industrial creditors than financials. Simulations calibrated to these results indicate …
Persistent link: https://www.econbiz.de/10013071217
In a regime change game, agents sequentially decide whether to attack or not, without observing the past actions by others. To dissuade them from attacking, a principal adopts a dynamic information disclosure policy - repeated viability tests. A viability test publicly discloses whether the...
Persistent link: https://www.econbiz.de/10012854068