Favara, Giovanni; Schroth, Enrique; Valta, Philip - Swiss National Centre of Competence in Research North … - 2010
We test whether the
´firms systematic equity risk reflects the shareholders´ incen-tives to default strategically on its debt. We use a standard real options model torelate the shareholders´strategic default behavior to frictions in the debt renegotia-tion procedure. We test its predictions...
