It is well understood that the equity of an insolvent firm can trade for a positive price so long as there is some positive probability that the firm will become solvent at some future point. Currently, however, this insight exists in the case law in an informal sense, while its use in the...

Does relationship bank oversight improve firm operational efficiency and reduce default risk? I find that a new loan from a relationship bank improves the technical efficiency of inefficient firms that have an elevated probability of default. Moreover, borrowing firms with elevated default risk...

In this paper we propose a method that provides a useful technique to compare relationship between risk involved that takes customer becomes defaulter and debt collection process that might make this defaulter recovered. Through estimation of competitive risks that lead to realization of the...

Baird and Casey recently argued in favor of contractual innovations that allow lenders to contract around bankruptcy law. These innovations, which they call withdrawal rights, are said to increase the efficiency of financing in many cases, and Baird and Casey urge judges to enforce them. This...

The purpose of the paper was to highlight the conflict between business practice in Poland and the legal interpretation of the Polish Bankruptcy Act. Many companies in Poland fail to fill for bankruptcy at the time when they should do so mostly because the managers differently interpret the...

We exploit a quasi-natural experiment to identify the importance of professional connections in determining a firm's board composition. At the individual level, directors who share work experiences with the executives/directors of bankrupt firms experience on average a 6-percentage-point decline...

The goal of this paper is to present early warning models used in the process of bankruptcy recognition that should meet the terms of good economic condition. Economic condition of a company on a capital market is good when the goal of the business is achieved, namely the increase in value, that...

Derivatives enjoy special status in bankruptcy: They are exempt from the automatic stay and effectively senior to virtually all other claims. We propose a corporate finance model to assess the effect of these exemptions on a firm's cost of borrowing and its incentives to engage in efficient...