This paper analyzes the effect of corporate debt offerings on stock prices. Straight debt offerings have non-positive price effects, while convertible debt offerings have significantly negative effects. Public utility mortgage (non-convertible) bond offerings have marginally negative effects,...

Recent empirical studies find that options trading enhances firm value by allowing for a more efficient allocation of firm resources. In this paper, we develop and test the hypothesis that, in addition to a more efficient allocation of firm resources, options trading also enhances firm value...

Models based on asymmetric information predict that debt is least sensitive to private information and cannot explain the illiquidity of corporate debt in secondary markets. We analyze security design with moral hazard and offer a new explanation. First, the optimal compensation contract creates...

A Covenant, in general, is a promise undertaken by a company to its lenders or bondholders. Covenants are either operational or financial. This dissertation focuses mainly on financial covenants, which are commonly included in bonds and loan agreements in order to safeguard creditors' interest....

Commodity producing corporations have trillions of dollars in outstanding debt. In that context, the bust in commodity prices has raised concerns about the sustainability of this debt and its systemic impacts. But so far the literature lacks estimates of how sensitive is this corporate debt to...

Debt pricing models typically ignore the bankruptcy process by specifying recovery rates as an exogenous function of the state space. I develop a parsimonious model in which corporate default induces a transfer of bond ownership away from traditional diversified holders toward risk-averse...

We study a novel aspect of a firm's capital structure, namely the profile of its debt maturity dates. In a simple theoretical framework we show that the dispersion of debt maturities constitutes an important dimension of capital structure choice, driven by firm characteristics and debt rollover...

This paper investigates whether firm managers time debt issuances according to market liquidity conditions. Using transactions data in the U.S. market from July 2002 to December 2009, our results show that both the moment and volume of debt issuance are significantly associated with periods of...