We analyze a distressed firm indebted to many creditors. The firm's owners have the option of choosing the sequence of restructuring negotiations with the creditors. We show that sequencing flexibility is beneficial to firm owners, and that the optimal sequencing of restructuring negotiations...

This paper simulates, via a genetic-learning algorithm, free-riding and coordination failure when shareholders are confronted with an unconditional tender-offer bid between the pre-takeover and post-takeover value of their firm. The outcomes produced by the simulations offer strong support for...

This paper determines the set of rational responses by shareholders to unconditional takeover offers at prices between the pre-acquisition and post-acquisition price of the firm. Two cases are considered. In the first case, coordination across shareholders is not presumed. In this case, the game...

This article models an economy in which managers, whose efforts affect firm performance, are able to make “inside” trades on claims whose value is also dependent on firm performance. It is shown that insider trading opportunities are a substitute for effort-assuring compensation packages....

In an asymmetric information framework, a number of authors have demonstrated the existence and uniqueness of short-term debt pooling equilibria in the absence of dissipative costs. We show that short-term debt pooling is robust to a broad range of deviations from stationarity and intertemporal...

This paper examines whether golden parachute adoptions in the banking industry during the eighties aligned the interests of CEOs with those of regulators and or shareholders. Our results provide evidence supporting concerns expressed by regulators: that boards of directors behaved...

This article compares the predictions of finite-shareholder models of conditional and unconditional takeover offers with the outcomes of laboratory experiments. In addition to differentiating between types of offers, the experimental designs span small and large firms as well as different levels...

The purpose of the this paper is to study the design of securities when a firm must raise external capital from an asymmetrically informed capital market and when the firm has operating discretion in the management of the capital raised that embodies the essence of the asset substitution...

We provide experimental evidence that nonbinding preplay communication between bidders in auctions of shares facilitates the adoption of equilibrium strategies: collusive strategies in uniform-price auctions, and the unique equilibrium in undominated strategies in discriminatory auctions. When...

We examine corporate issuance and payout policies in the presence of both adverse selection (in capital markets) and managerial opportunism. Our results establish the importance of the locus of decision control in the firm. When shareholders determine policies, debt financing is always optimal...