Showing 1 - 10 of 34,790
Weak creditor rights introduce contracting frictions and magnify conflicts of interest between borrowers and creditors. We examine the effects of creditor rights on the sensitivity of bank lending terms to aggregate relative to firm-specific information. We formulate two competing hypotheses. On...
Persistent link: https://www.econbiz.de/10012908921
Default probability plays a central role in the static tradeoff theory of capital structure. We directly test this … theory by regressing the probability of default on proxies for costs and benefits of debt. Contrary to predictions of the … theory, firms with higher bankruptcy costs, i.e., smaller firms and firms with lower asset tangibility, choose capital …
Persistent link: https://www.econbiz.de/10013122204
Probability of default plays a central role in the static tradeoff theory of capital structure. We provide a direct … test of this theory by regressing the probability of default, measured by S&P credit ratings and Moody's KMV Expected …. Contrary to predictions of the theory, firms with high bankruptcy costs, that is smaller firms and firms with lower asset …
Persistent link: https://www.econbiz.de/10013122234
By treating derivatives and financial repurchase agreements much more favorably than it treats other financial vehicles, American bankruptcy law subsidizes these arrangements relative to other financing channels. By subsidizing them, the rules weaken market discipline during ordinary financial...
Persistent link: https://www.econbiz.de/10013091160
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...
Persistent link: https://www.econbiz.de/10012854783
This paper studies the economic and theoretical foundations of insolvency risk measurement and capital adequacy rules … measuring insolvency risk and capital adequacy in Basel III. We show how insolvency risk measurement, capital adequacy and … integrated measure of risk and capital by disentangling assets, debt and equity; the Firm Insolvency Risk Index (FIRI) that is …
Persistent link: https://www.econbiz.de/10012959099
I estimate the relationship between increased creditor rights and legal expenditures of debtor corporations by analyzing the effect of a major securitization law in India allowing secured creditors to seize collateral. While the law decreased spending on legal proceedings commonly used by firms...
Persistent link: https://www.econbiz.de/10014349158
This paper documents a set of stylized facts about leverage and financial fragility in the non-financial corporate sector in emerging markets since the Global Financial Crisis (GFC). Corporate debt vulnerability indicators prior to the Asian Financial Crisis (AFC) attributed to corporate...
Persistent link: https://www.econbiz.de/10012956862
Corporate leverage responds differently to employees' rights in bankruptcy depending on whether it is driven by strategic concerns in wage bargaining or by credit constraints. Using novel data on employees' rights in bankruptcy, we estimate their impact on leverage, exploiting time-series,...
Persistent link: https://www.econbiz.de/10012902012
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