This paper addresses the classical real options problem taking debt renegotiation into account. A critical feature is that equityholders can freely initiate debt renegotiation at most once after debt issuance. We provide explicit solutions of the pricing and timing of the option to start a...

This paper analyzes the impact of one single debt renegotiation round on investment and financing decisions. Shareholders have an American renegotiation option for a permanent coupon deduction. We produce an analytical proof for a widely-used assertion that optimal renegotiation time is the...

We develop a dynamic tradeoff model that incorporates both controlling-minority shareholders conflict and shareholders-debtholders conflict to examine the relationship among agency conflicts, expansion investment, capital structure, and debt renegotiation. We show that balancing the two...

Debt renegotiations are popular in practice; a key problem is how to specify their renegotiation time. We provide a new method to address the timing of debt renegotiations with the patterns of debt-equity swap, strategic debt service and distressed exchange respectively. We incorporate credible...

In this paper, we assume that a small- and micro-sized enterprise (SME) funds the expansion investment cost through bank-tax-guarantee (BTG, henceforth) which embeds two credit enhancement mechanisms by taxation and guarantee. We develop a capital structure model to exhibit a trade-off between...

This paper assumes a small- and micro-sized enterprise (SME, henceforth) invests in a project, of which the investment cost is funded by the bank-tax-guarantee (BTG, henceforth), a financial innovation instrument that combines bank-tax-interaction (BTI, henceforth) and credit guarantee (EGS,...