We model the entrepreneurial firm's choice of debt finance, allowing for debt renegotiations in the event of financial distress. We differentiate two sources of debt finance, bank debt and trade credit, by the implicit equity stake that lenders hold in the borrowing firm. Lenders with a large...

This paper investigates the relevance of growth opportunities for the interpretation of investment-cash flow sensitivity of large Belgian companies. We use data on both listed and large unlisted firms to better distinguish between issues of overinvestment due to agency problems and...

Research on the question of what makes firms perform well has shown that product market competition, financial pressure and ownership or ownership identity are important performance drivers. Recently the issue of whether or not their impact is influenced by environmental or contextual...

Recent studies of U.S. Chapter 11 show it to be a relatively efficient procedure. We examine reorganization cases in a Continental European, creditor-oriented bankruptcy system, viz. Belgium, and report very different findings. Using hazard and cure regression models to determine what drives the...

We argue that domestic business groups are able to actively optimize the internal/external debt mix across their subsidiaries. Novel to the literature, we use bi-level data (i.e. data from both individual subsidiary financial statements and consolidated group level financial statements) to model...

Recent empirical research has stressed the importance of economy wide factors in the assessment of default risk, for instance for bond portfolios or portfolios of bank loans. Macroeconomic risk is essentially systematic, as it is difficult to reduce through diversification. Adequate forecasts of...

Many Continental European countries recently reformed their bankruptcy legislations to stimulate reorganization and firm survival. We show that the Belgian 1997 bankruptcy code reform, which implemented several international best practice recommendations, significantly reduced aggregate small...

This paper develops a new explanation for the emergence of large European holding groups that typically control many of the largest companies of their country. These holding groups usually consist of (sometimes many) non-holding firms (i.e. industrial companies, banks,...) with layers of holding...