Bankruptcy costs
Socially excessive bankruptcy costs and the benefits of interest rate ceilings on loans
... More specifically, we pursue the idea that an economy can experience socially excessive bankruptcy costs in the absence of some government intervention. For example, suppose that — in the absence of interest ...
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A MODEL OF FIRM BEHAVIOUR WITH EQUITY CONSTRAINTS AND BANKRUPTCY COSTS.
... In the model presented below (Sections 2 and 3), firms have limited access to equity market (they are equity-constrained) but not to the debt market (information problems only exist in the former – eventually we will ...
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The joint impact of bankruptcy costs, fire sales and cross-holdings on systemic risk in financial networks
... that bankruptcy costs and fire sales impact systemic risk ...Firstly, bankruptcy costs are only incurred in the case of a default, while fire sales may also occur if there are no defaults in ...
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Secured Creditor Control in Bankruptcy: Costs and Conflict
... in bankruptcy, floating charge holders have a strong incentive to sell the business as a going concern as soon as possible instead of selling it piecemeal in order to maximize their own ...
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Optimal insurance with counterparty default risk
... expected bankruptcy costs, the insurance buyer needs to adjust the demand for coverage to internalize expected default ...that bankruptcy costs may explain deductibles without requiring the ...
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Determinants of Capital Structure: An Empirical Investigation from UK listed firm panel data
... the financial distress risk would be expected. Additionally, Rajan and Zingales (1995) claimed that financial distress or bankruptcy costs could be tackled by tangible assets, since these assets have higher ...
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A literature review of the trade−off theory of capital structure
... and bankruptcy costs seems to have little relevance in explaining the capital structu- re of quoted Portuguese ...transaction costs the adjustment towards a target debt ratio of quoted Portuguese ...
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Costs and Recovery Rates in the Dutch Liquidation-Based Bankruptcy System
... direct costs are on average 16% of realized assets. The costs are lower in larger firms and in firms with more bank debt, while costs increase with the time it takes to sell assets and the number of ...
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Bank Stability and Market Discipline: Debt-for-Equity Swap versus Subordinated Notes
... The policy implications of the paper highlight the fact that the DES contract has salient advantages over subordinated debt as an efficient tool for enhancing market stability and firm efficiency by reducing the value of ...
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Optimal Currency Hedging
... that this should be the “goal of corporate risk management—namely, the elimination of costly lower-tail outcomes” (p. 8). Second, swings in exchange rates have normally been associated with very dramatic industry ...
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Costs of Asbestos Litigation and Benefits of Reform. Prepared for National Association of Manufacturers Asbestos Alliance
... * Productivity Loss = Overall Productivity Loss ($303 billion) – Defendants’ Time ($7.5 billion) – Indirect Bankruptcy Costs ($3.7 billion). Claimant Recovery: $39 billion[r] ...
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THE COSTS AND BENEFITS OF SECURED CREDITOR CONTROL IN BANKRUPTCY: EVIDENCE FROM THE UK
... the costs imposed on other creditors by a senior claimant’s inadequate incentives to maximise net ...UK bankruptcy law permitted firms to give complete ex post control to secured creditors, through a ...
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Market implied costs of bankruptcy
... of bankruptcy, implying higher ...absolute bankruptcy costs are increasing in size up to some point and decreasing therea ...that bankruptcy costs can decrease for large firms can be due ...
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Credit modelling and regime-switching
... important element in determining corporate capital structure, since it effectively gen- erates a stream of positive future cash flows that add to a firm’s net worth. Indeed, the essence of the contribution of Modigliani ...
155
Enforcement and Firm Finance
... the bankruptcy probability remains constant. In region 2, costs c are sufficiently high that it becomes optimal to reduce the face value v ¯ ...the bankruptcy probability and saves expected ...
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Corporate Restructuring. Dr. Edward Altman Max L. Heine Professor of Finance NYU Stern School of Business
... With corporate taxes and no bankruptcy costs, the value of the firm increases and the weighted average cost of capital decreases as the amount of debt goes up. Case 3[r] ...
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Valuation of Put Options on Leveraged Equity
... assumption", bankruptcy costs and the bargaining power of equity holders during reorganisation can significantly affect the valuation of put options and "down-and-in" barrier ...
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Repurchasing debt
... We model a single-date same-seniority (“pari passu”) debt repurchase from a group of identical bondholders, each holding the same small share of debt. When the …rm has out- standing debt of di¤erent seniorities, the ...
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Dynamic investment, debt structure and debt overhang
... costly bankruptcy losses should the renegotiation be ...and bankruptcy costs limits bank debt capacity; (ii) The substitution effect between bank and market debt dominates in most cases; (iii) Bank ...
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The Behavior of Banks under the Deposit Insurance and Capital Requirements
... while bankruptcy costs make equity more ...of bankruptcy, and the more bankruptcy ...possible bankruptcy burden to the ...implicit bankruptcy costs. Some studies show that ...
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