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Corporate failure and the business cycle : measuring systematic risk
Ogneva, Maria; Piotroski, Joseph D.; Zakolyukina, … - 2016
In this paper, we use accounting fundamentals to measure systematic risk of distress. Our main testable prediction—that this risk increases with the probability of recessionary failure, P(R|F)—is based on a stylized model that guides our empirical analyses. We first apply the lasso method to...
Persistent link: https://www.econbiz.de/10011524470
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The bank as grim reaper : debt composition and bankruptcy thresholds
Carey, Mark S.; Gordy, Michael B. - 2016
We offer a model and evidence that private debtholders play a key role in setting the endogenous asset value threshold below which corporations declare bankruptcy. The model, in the spirit of Black and Cox (1976), implies that the recovery rate at emergence from bankruptcy on all of the firm's...
Persistent link: https://www.econbiz.de/10011578370
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Confronting the zombies : policies for productivity revival
Andrews, Dan; McGowan, Muge Adalet; Millot, Valentine - 2017
much scope to improve the design of insolvency regimes in order to reduce the barriers to restructuring of weak firms and … the personal costs associated with entrepreneurial failure. Insolvency regime reform can not only address the … markets. As the zombie firm problem may partly stem from bank forbearance, complementary reforms to insolvency regimes are …
Persistent link: https://www.econbiz.de/10011779088
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A dialogue on the costs and benefits of automatic stays for derivatives and repurchase agreements
Duffie, Darrell; Skeel, David - 2012 - Last rev.: March 04, 2012
For nearly two years, the two of us have had a running discussion of the costs and benefits of automatic stays in bankruptcy for qualified financial contracts (QFCs) such as derivatives and repurchase agreements, particularly those held by systemically important major dealer banks. Under current...
Persistent link: https://www.econbiz.de/10009504439
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Cash holdings and credit risk
Acharya, Viral V.; Davydenko, Sergei A.; Strebulaev, Ilya A. - 2012
Intuition suggests that firms with higher cash holdings should be 'safer' and have lower credit spreads. Yet empirically, the correlation between cash and spreads is robustly positive. This puzzling finding can be explained by the precautionary motive for saving cash, which in our model causes...
Persistent link: https://www.econbiz.de/10010206259
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The dynamics of adjustable-rate subprime mortgage default : a structural estimation
Fang, Hanming; Kim, You Suk; Li, Wenli - 2015
We present a dynamic structural model of subprime adjustable-rate mortgage (ARM) borrowers making payment decisions taking into account possible consequences of different degrees of delinquency from their lenders. We empirically implement the model using unique data sets that contain information...
Persistent link: https://www.econbiz.de/10011499436
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Fear the walking dead : zombie firms, spillovers and exit barriers
Gouveia, Ana Fontoura; Osterhold, Christian - 2018
Productivity growth is slowing down among OECD countries, coupled with increased misallocation of resources. A recent strand of literature focuses on the role of non-viable firms (“zombie firms”) to explain these developments. Using a rich firm-level dataset for one of the OECD countries...
Persistent link: https://www.econbiz.de/10011975694
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Moving towards a more dynamic business sector in Spain
González Pandiella, Alberto - 2014
be relieved. This would be facilitated by more efficient insolvency procedures and further development of non …
Persistent link: https://www.econbiz.de/10010464863
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Insolvency regimes, technology diffusion and productivity growth : evidence from firms in OECD countries
McGowan, Muge Adalet; Andrews, Dan; Millot, Valentine - 2017
This paper explores the link between the design of insolvency regimes across countries and laggard firms’ multi …-factor productivity (MFP) growth, using new OECD indicators of the design of insolvency regimes. Firm-level analysis shows that reforms to … insolvency regimes that lower barriers to corporate restructuring are associated with higher MFP growth of laggard firms. These …
Persistent link: https://www.econbiz.de/10011823606
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A market-based study of the cost of default
Davydenko, Sergei A.; Strebulaev, Ilya A.; Zhao, Xiaofei - 2012
Although the cost of financial distress is a central issue in capital structure and credit risk studies, reliable estimates of its size are difficult to come by. This paper proposes a novel method of extracting the cost of default from the change in the market value of a firm's assets upon...
Persistent link: https://www.econbiz.de/10010206258