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Liquidity, Systemic Risk, and the Bankruptcy Treatment of Financial Contracts

Mokal, Riz - 2016

Persistent link: https://www.econbiz.de/10013002918

No-fault default, chapter 11 bankruptcy, and financial institutions

Merton, Robert C.; Thakor, Richard T. - In: Journal of banking & finance 140 (2022), pp. 1-12

Persistent link: https://www.econbiz.de/10013463098

The Economic Costs of Financial Distress

Custodio, Claudia; Ferreira, Miguel A.; … - 2022

We estimate the economic costs of financial distress due to lost sales, by exploiting cross-supplier variation in real estate assets and leverage and the timing of real estate shocks. We show that for the same client buying from different suppliers, its purchases from distressed suppliers...

Persistent link: https://www.econbiz.de/10013492242

Cash holdings and credit risk

Acharya, Viral V.; Davydenko, Sergei A.; Strebulaev, Ilya A. - 2012

Intuition suggests that firms with higher cash holdings should be 'safer' and have lower credit spreads. Yet empirically, the correlation between cash and spreads is robustly positive. This puzzling finding can be explained by the precautionary motive for saving cash, which in our model causes...

Persistent link: https://www.econbiz.de/10010206259

The Economic Costs of Financial Distress

Custodio, Claudia - 2020

We estimate the economic costs of financial distress by exploiting cross-supplier variation in real estate assets and leverage, and the timing of real estate shocks. We show that for the same client buying from different suppliers, its purchases from distressed suppliers decline by an additional...

Persistent link: https://www.econbiz.de/10012850487

Analysis of bankruptcy threat for risk management purposes : a model approach

Wieczorek-Kosmala, Monika; Błach, Joanna; Trzęsiok, Joanna - In: International Journal of Financial Studies : open … 6 (2018) 4, pp. 1-17

In previous works, the importance of risk management implementation was addressed with regard to the problem of bankruptcy threat, with the explanation of risk impact on higher bankruptcy costs or the underinvestment problem. However, the evaluation of the impact of risk outcomes is technically...

Persistent link: https://www.econbiz.de/10011963925

The Cost of Financial Distress and the Timing of Default

Elkamhi, Redouane; Parsons, Christopher A.; Ericsson, Jan - 2022

At any point in time, most firms are not in financial distress. This implies that they must suffer value losses unrelated to their leverage before becoming financially distressed. We first show that if estimates of ex-ante distress costs are not filtered of such non-debt related value declines,...

Persistent link: https://www.econbiz.de/10014244725

Financial distress as an agency problem : evidence on non-monotonic and substitute discipline effects of leverage and competition

Uğur, Mehmet; Solomon, Edna Maeyen; Zeynalov, Ayaz - 2021

This paper addresses two issues encountered in the empirical financial distress literature: a-theoretical treatment of leverage and product-market competition as predictors of financial distress hazard; and lack of attention to frailty as a potential source of bias in reported estimates. We...

Persistent link: https://www.econbiz.de/10014533532

Abatement, Care, and Compliance by Firms in Financial Distress

Evans, Mary F.; Gilpatric, Scott M. - 2011

care spending, by firms facing two sources of insolvency risk. If poor profit or a realized environmental liability … triggers insolvency, then the firm forgoes a profitable future. The behavioral implications of the survival motive vary across … firms. Firms for whom the principal insolvency risk is liability-related liability choose supra-optimal precaution, even …

Persistent link: https://www.econbiz.de/10014185678

Corporate Hedging, Financial Distress, and Product Market Competition

Zhu, Margaret Rui - 2011

The paper investigates the relationship between corporate hedging and product market competition. Using a broad sample of multiple commodity-inputs industries over the period of 1994-2008, the paper examines whether an unfavorable commodity shock has a long term effect on unhedged firms. I find...

Persistent link: https://www.econbiz.de/10013128617