Social capital theory predicts individuals establish social ties based on homophily, i.e., affinities for similar others. We exploit a unique sample to analyze how similarities and social ties affect career outcomes in banking based on age, education, gender, and employment history to examine if...

We exploit a unique sample to analyze how homophily (affinity for similar others) and social ties affect career outcomes in banking. We test if these factors increase the probability that the appointee to an executive board is an outsider without previous employment at the bank compared to being...

This paper is concerned with the valuation and analysis of risky debt instruments with arbitrary interest and principal payments subject to default risk. We use a discrete risk-neutral present value model with expected payments for risk-neutral investors and risk-free spot rates for the...

This paper examines the effects of improvement in creditors’ rights protection on firms’ financing choices and securities issuance. To address these issues, I exploit exogenous variation in creditors’ rights protection induced by the staggered adoption of anti-recharacterization laws by...

The article presents the initial proposal for the group risk measurement based on the comparison of two interconnected sets of webs. The risk scalar has been presented both for each separated subsidiary as well as for the group itself. It was shown the risk profile of the group could be...

High-yield debt, including leveraged loans, is characterized by incurrence financial covenants, or "cov-lite" provisions. Unlike, traditional, maintenance covenants, incurrence covenants preserve equity control rights but trigger pre-specified restrictions on the borrower's actions once the...

We show that performance-sensitive debt (PSD) is used to reduce hold-up problems in repeated lending relationships. Using a large sample of bank loans, we find a more frequent use of PSD if hold-up is more likely, e.g. if a longterm lending relationship exists and the borrower has fewer outside...

Using internal data of a leasing company in Germany, we examine the determinants of the probability and use of leasing by small firms. We find that small and young firms are likely to be constrained on the leasing market but use leasing to increase their debt capacity. Beyond contract- and...

This paper is concerned with the valuation and analysis of default-risky debt instruments with arbitrary interest and principal payments. For the valuation, we use three nested multivariate extensions of the standard Merton (1974) model for pricing risky zero-coupon bonds. First, we present a...

We use a unique sample of self-employed and corporate clients provided by a universal bank in Germany to investigate how recall risk of recallable bank lines of credit impact cash holdings and line usage. While the bank does not require an upfront fee for providing a line of credit, which may...