Inside debt renegotiation: Optimal debt reduction, timing, and the number of rounds
نویسندگان
چکیده
منابع مشابه
Debt Valuation, Renegotiation, and Optimal Dividend Policy
The valuation of debt and equity, reorganization boundaries, and firm’s optimal dividend policies are studied in a framework where we model strategic interactions between debt holders and equity holders in a game-theoretic setting which can accommodate varying bargaining powers to the two claimants. Two formulations of reorganization are presented: debt-equity swaps and strategic debt service r...
متن کاملDuration of sovereign debt renegotiation
Sovereign debt renegotiations take an average of nine years for bank loans but only one year for bonds. Our paper provides an explanation to this finding by highlighting one key difference between bank loans and bonds: bank debt is rarely traded, while bond debt is heavily traded on the secondary market. The secondary market plays a crucial information revelation role in shortening renegotiatio...
متن کاملOptimal Default and Liquidation with Tangible Assets and Debt Renegotiation
This paper proposes a new pricing model for corporate securities issued by a levered firm with the possibility of debt renegotiation. We take the structural approach that the firm’s earnings follow a geometric Brownian motion with stochastic collaterals. While equity holders can default the firm for their own benefits when the earnings become insufficient to go on the firm, they may want to liq...
متن کاملDebt Renegotiation With Incomplete Contract
A debt contract usually does not include a provision about renegotiation. The right to seize the borrower’s asset and the rules of this process are usually stipulated in the contract. Such a promise not to renegotiate is not credible since renegotiation can mitigate the dead-weight loss of liquidating insolvent borrowers. Once the initial contract may not consider the renegotiation procedure an...
متن کاملInside Debt and the Design of Corporate Debt Contracts
Agency theory posits that debt-like compensation (such as defined-benefit pensions and other deferred compensation) aligns managerial interests more closely with those of debtholders and reduces the agency cost of debt. Consistent with theory, we find that a higher CEO relative leverage, defined as the ratio of the CEO's inside leverage (debt-toequity compensation) to corporate leverage, is ass...
متن کاملذخیره در منابع من
با ذخیره ی این منبع در منابع من، دسترسی به آن را برای استفاده های بعدی آسان تر کنید
ژورنال
عنوان ژورنال: Journal of Corporate Finance
سال: 2014
ISSN: 0929-1199
DOI: 10.1016/j.jcorpfin.2014.05.012