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Debt Structure When Bankruptcy Law Offers Incentives to Restructure

Hasan, Iftekhar - 2019

We augment the LLSV creditor rights index with a new “restructuring index” that measures the incentives provided to creditors to grant concessions outside formal bankruptcy. We study the joint impact of the two indexes on a firm's leverage policy. We show that the two indexes have at most a...

Persistent link: https://www.econbiz.de/10012903408

The Ex Ante Effect of Creditor Rights on Corporate Financial and Investment Policy

Canipek, Aras - 2019

We examine the ex ante effect of an exogenous reduction in secured creditor rights on corporate financial and investment policy. We find that firms increase corporate leverage using both the reduced distress costs of secured debt and the positive externalities the lower secured creditor rights...

Persistent link: https://www.econbiz.de/10012900028

Creditor Rights, Threat of Liquidation, and Labor-Capital Choice of Firms

Alok, Shashwat - 2020

In 2002, a legal reform introduced in India allowed secured creditors to seize and liquidate the defaulter's assets. We study firms' choice between capital and labor in response to these strengthened creditor rights by exploiting variation in their pre-policy proportion of collateralizable...

Persistent link: https://www.econbiz.de/10012850410

Increased Creditor Protection in Bankruptcy and Trade Credit : Evidence from the 2005 BAPCPA

Ge, Wenxia - 2018

We examine whether the increased creditor protection under the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) affects suppliers' provision of trade credit to their customers with high default risk. Employing a difference-in-differences analysis for a sample of U.S. public...

Persistent link: https://www.econbiz.de/10012931267

Creditor Rights, Corporate Leverage and Investments, and the Firm Type

Canipek, Aras; Kind, Axel H.; Wende, Sabine - 2021

Stronger creditor rights reduce credit costs and thus may allow firms to increase leverage and investments, but also increase distress costs and thus may prompt firms to lower leverage and undertake risk-reducing but unprofitable investments. Using a German bankruptcy law reform, on average, we...

Persistent link: https://www.econbiz.de/10013222495

Corporate Restructuring and Creditor Power : Evidence from European Insolvency Law Reforms

Closset, Frédéric; Großmann, Christoph; Kaserer, … - 2021

In an attempt to match US bankruptcy law, many European countries have reformed their insolvency laws towards a regime … difference-in-differences analysis around eight insolvency reforms in 15 European countries, this paper finds a relative increase …. Overall, the results are consistent with the view that creditors may be negatively affected by insolvency law reforms oriented …

Persistent link: https://www.econbiz.de/10013244320

Chapter 6. Law and Finance After a Decade of Research

La Porta, Rafael; Lopez-de-Silanes, Florencio; … - 2013

In the last dozen years, economists have produced a considerable body of research suggesting that the historical origin of a country’s laws is highly correlated with a broad range of its legal rules and regulations, as well as with economic outcomes. Much of this research has dealt with rules...

Persistent link: https://www.econbiz.de/10014025558

Credit Derivatives, Creditor’s Powers and Bankruptcy Initiation

Radulovic, Branko - 2010

While credit risk transfer market dramatically increases the complexity of lender's incentive structure and above all reduces the incentives of the bank to monitor debtor, a ‘harsh' bankruptcy environment (as evidenced in the shift from the debtor controlled to creditor controlled...

Persistent link: https://www.econbiz.de/10013139530

Bankruptcy : Is it Enough to Forgive or Must We Also Forget?

Elul, Ronel - 2012

In many countries, lenders are restricted in their access to information about borrowers' past defaults. The authors study this provision in a model of repeated borrowing and lending with moral hazard and adverse selection. They analyze its effects on borrowers' incentives and access to credit,...

Persistent link: https://www.econbiz.de/10013114975

Stiffing the Creditor : The Effect of Asset Verifiability on Bankruptcy

Giambona, Erasmo - 2019

Evidence suggests that asset pledgeability, debt complexity, and valuable control rights of dispersed debt influence distress resolution. We model how courts' imperfect verifiability of assets and valuable control of misaligned creditors shape firms' debt structure and create coordination...

Persistent link: https://www.econbiz.de/10012902343

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