A growing number of jurisdictions have adopted bankruptcy law reforms to aid debt restructuring. By utilizing a difference-in-differences model based on bankruptcy law reforms across six economically advanced jurisdictions, we discover that firms adopt more diversified debt instruments following...

In recent years, a number of papers have established a new empirical regularity. Stocks of distressed firms vastly underperform those of financially healthy firms. It is not necessary to attribute the negative excess returns of distressed firms to inefficient or irrational markets. We show that...

This paper examines the impact of stock liquidity on firm bankruptcy risk. Using the Securities and Exchange Commission decimalization regulation as a shock to stock liquidity, we establish that enhanced liquidity decreases default risk. Stocks with the highest default risk experience the...

Financial analyses such as valuation, solvency and capital adequacy play a crucial role in bankruptcy. Over the course of the 20th century, methods of financial analysis in bankruptcy have shifted from earnings multiples to discounted cash flow (DCF) and recently to market-based approaches such...

A growing number of jurisdictions have adopted bankruptcy law reforms in the spirit of U.S. Chapter 11 to facilitate the restructuring of distressed corporate debt. This paper evaluates the impact of these reforms on firms' choice of debt structures. Using a difference-in-differences design...

Are all covenants equally effective at reducing the bondholder-shareholder conflict? Examining the most frequently used bond covenants, we document that four out of 24 restrictions are associated with significantly higher bankruptcy risk. The use of these Default Indicating covenants can be...

We document the negative effect of stock liquidity on default risk for a sample of 46 countries. We further find that default risk declines following the introduction of the Directive on Markets in Financial Instruments (MiFID)—an exogenous shock that increases liquidity. The effect of...

Nowadays valuation has become an inherent part of business environment which has experienced dynamic changes in economic activity through mergers and acquisitions, organizational restructuring and repurchasing of shares. The dynamic centre of all these activities is valuation, whose methods are...

The primary purpose of this paper is to investigate whether companies can use acquisition as a strategy to reduce their probability of takeover. A subsidiary issue is whether such a strategy has any impact on their subsequent probability of bankruptcy. The determinants of making an acquisition,...

The Indian debt overhang issue is one of the major reasons that fresh investments are currently not being made in the scale required to promote higher growth and boost employment. Among banks the public sector banks (PSBs) are burdened with the bulk of net non-performing loans (NNPAs). These...