In this paper I analyze how debt structure and the strategic interaction betweenshareholders and creditors in the event of default a¤ect expected stock returns. By en-dogenizing shareholders decision to default, the model generates new predictions linking…rm characteristics to expected stock...

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...

This paper analyzes changes in firms' cash flows and discount rates around share repurchase announcements. Both cash flow and discount rate volatility decrease significantly after repurchase announcements. The decrease in volatility is smallest for firms that are likely to be underpriced and...

This paper analyzes the effects of loan contract amendments and insider trading on stock returns. Loan renegotiations are frequent and contain potentially relevant information about the financial health of firms. Because managers and officers are better informed about the outcome of such...

We argue that the prospect of an imperfect enforcement of debt contracts in default reduces shareholder-debtholder conflicts and induces leveraged firms to invest more and take on less risk as they approach financial distress. To test these predictions, we use a large panel of firms in 41...

We build a model of investment and financing decisions to study the choice between bonds and bank loans in a firm's marginal financing decision and its effects on corporate investment. We show that firms with more growth options, higher bargaining power in default, operating in more competitive...