Assuming benevolent managers, the debt-overhang problem suggests that distressed firms generally refrain from issuing equity. In contrast, agency theory predicts that distressed firm managers have strong self-interests to finance even deteriorating projects through equity issuance. This paper...

Using a dynamic model of strategic bargaining between equity and debt holders following default, we analyze the impact of shareholder bargaining power on the investment effects of debt overhang. Our empirical tests utilize a new measure of debt overhang wedge based on default probabilities...

This study provides new stylized facts on the determinants of corporate failure and acquisition in Germany. It also offers important lessons for the design of empirical studies. We show that firms experiencing failure or acquisition are significantly different from surviving firms on a number of...

This study investigates the determinants of changes in corporate ownership and firm failure, taking into account different types of sellers and buyers of control blocks. For a large panel of German corporations we find that firms are more likely to fail or to be sold when performance is poor,...

This paper examines the effect of ownership structure of a controlling shareholder on the financial constraints of non-financial firms in 22 economies for the 1982-2009 period. We find that the overinvestment propensity of a controlling shareholder becomes less severe with an increase in...

This study provides new stylized facts on the determinants of corporate failure and acquisition in Germany. It also offers important lessons for the design of empirical studies. We show that firms experiencing failure or acquisition are significantly different from surviving firms on a number of...

Distressed firms and the banks that lend to these firms often have conflicting interests when going through the Chapter 11 process, freefall bankruptcy vs prepack bankruptcy. We examine whether common ownership, i.e., an institution with holdings in both the borrowing and the lending firms,...

This study provides new stylized facts on the determinants of corporate failure and acquisition in Germany. It also offers important lessons for the design of empirical studies. We show that firms experiencing failure or acquisition are significantly different from surviving firms on a number of...

Using the Ordinary Least Square (OLS) estimation technique based on a sample of 180 listed firms from 2008 to 2018, this study investigates the impact of institutional ownership on firm performance in the Bangladeshi setting. Consistent with the "active monitoring" view, the results indicate...

Purpose The ownership structure in Japanese firms has experienced a significant change recently, fueled primarily by regulatory changes. This has important repercussions on corporate performance and risk. This paper examines the impact of insider ownership on the default risk of Japanese firms....