Model uncertainty hampers consensus on the main determinants of corporate default. We employ Bayesian model averaging (BMA) techniques in order to shed light on this issue. Empirical findings suggest that the most robust determinants of corporate default are firm-specific variables such as the...

We construct a mortality table for U.S. public companies during 1985-2006. We find that firms' age-specific mortality rates initially increase, peaking at age three, and then decrease with age, implying that the first three years of public life are critical. Financial intermediaries involved...

We construct a mortality table for U.S. public companies during 1985–2006. We find that firms' age-specific mortality rates initially increase, peaking at age three, and then decrease with age, implying that the first three years of public life are critical. Financial intermediaries involved...

This paper investigates the optimal sequencing of debt issues. Our theoretical model suggests that once firms issue debt with one level of seniority, they may have an incentive to alternate seniorities, because of priced absolute priority rule (APR) violations. When we introduce explicit costs...

A concern often raised in relation to the U.S. bankruptcy regime is the high level of control over proceedings enjoyed by secured lenders. In particular, through the use of the arsenal of provisions in debtor-in-possession (DIP) financing, secured lenders can quickly effectuate asset sales....

The lenders that fund Chapter 11 reorganizations exert significant influence over the bankruptcy process through the contract associated with the debtor-in-possession (“DIP”) loan. In this Article, we study a large sample of DIP loan contracts and document a trend: over the past three...

After highlighting the importance of small companies to the UK economy, new archival evidence is provided from an exploratory study which investigates the financing and failure of 21,147 UK single owner-managed (OM) corporate start-ups. Relative to comparable US survey evidence, UK OM corporate...

The US bankruptcy code provides enhanced priority and security features to debtor-in-possession (DIP) loans which can be obtained from a lender with whom the borrower may have no past lending relationship. The enhanced priority of DIP financing, and the choice of a DIP lender, significantly...

We propose a corporate default rating process in the Taiwan Stock Market which incorporates financial ratios, corporate governance, macroeconomic variables and financial media reports. In contrast to the prior studies, we construct alternative measurements of the ‘distress intensity of...

Exploiting the timing of the 2005-06 Italian bankruptcy law reforms, we disentangle the effects of reorganization and liquidation in bankruptcy on bank financing and firms' investment. A 2005 reform introduces procedures facilitating loan renegotiation. The 2006 reform subsequently strengthens...