We augment the LLSV creditor rights index with a new “restructuring index” that measures the incentives provided to creditors to grant concessions outside formal bankruptcy. We study the joint impact of the two indexes on a firm's leverage policy. We show that the two indexes have at most a...

Large orders for corporate bonds get preferential treatment unlike large orders for stocks on the NYSE. A structural explanation, namely, that the corporate bond market is dealer-dominated has been offered for the favorable pricing. In this paper, we offer an additional explanation, namely, that...

There is a wide body of literature in corporate finance that examines the tradeoffs between liquidation and re-organization for creditors in financially distressed firms (Kahl (2002), Hotchkiss (1995), Gertner and Scharfstein (1991)). We incorporate salient elements from this literature into a...