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Penalties and Optimality in Financial Contracts: Taking Stock

Robe, Michel A.; Steiger, Eva-Maria; Michel, Pierre-Armand - Sonderforschungsbereich 649: Ökonomisches Risiko, … - 2006

the current debate on it. We present a broad history of penalties in financial contracts to highlight the interactions … liability rules and bankruptcy laws decreases as exogenous sources of uncertainty become relatively more important, and … increases with the opportunity for moral hazard (related to diligence, risk taking, or deception). Second, bankruptcy laws …

Persistent link: https://www.econbiz.de/10005784849

RISK-SHARING AS A DETERMINANT OF CAPITAL STRUCTURE: INTERNAL FINANCING, DEBT, AND (OUTSIDE) EQUITY

Lara, Yadira González de - Instituto Valenciano de Investigaciones Económicas (IVIE) - 2004

This paper proposes a historically-grounded mechanism-design model of corporate finance, with two-side risk aversion under limited contract enforceability, where (inside) equity held by entrepreneurs, debt and (outside) equity coexist. This capital structure shares optimally the...

Persistent link: https://www.econbiz.de/10005731430

Improving the Prevention of Environmental Risks with Convertible Bonds

SCHMITT, André; SPAETER, Sandrine - Bureau d'Économie Théorique et Appliquée (BETA), … - 2002

In this paper, a manager borrows external funds in order to invest in production and also in prevention. The latter action must reduce the environmental risk driven by the activity of the firm. Prevention is observable neither by outside lenders nor by institutions such as environmental agencies...

Persistent link: https://www.econbiz.de/10005385238

A Theory of Authority in Bilateral Contracting

Ambec, Stefan - Centro Studi di Economia e Finanza (CSEF) - 2003

Two players are involved in a joint project during which a decision must be reached. Each player has private information about future profits. Authority gives one player the right to decide first in a pre-defined set of alternatives. In this framework, I show that (partial) authority should be...

Persistent link: https://www.econbiz.de/10005626734

A Note on Corporate Taxation, Limited Liability, and Asymmetric Information

Miglo, Anton - 2007

Becker and Fuest (forthcoming) provides a new explanation for the important and puzzling link between limited liability and corporate taxation. The authors argue that a corporate tax on all entrepreneurs with limited liability is optimal when entrepreneurs can offset potential losses and when...

Persistent link: https://www.econbiz.de/10014050375

A Note on Corporate Taxation, Limited Liability and Asymmetric Information

Miglo, Anton - 2007

Persistent link: https://www.econbiz.de/10012776129

How to Sell a (Bankrupt) Company?

Cornelli, Francesca; Felli, Leonardo - C.E.P.R. Discussion Papers - 2001

The restructuring of a bankrupt company often entails its sale. This Paper suggests a way to sell the company that maximizes the creditors' proceeds. The key to this proposal is the option left to the creditors to retain a fraction of the shares of the company. Indeed, by retaining the minority...

Persistent link: https://www.econbiz.de/10005791603

Economics of bankruptcy exemption: Signaling value of collateral, cost of credit and access to credit

Arca, P.; Atzeni, G.; Deidda, L. - Centro Ricerche Nord Sud (CRENoS) - 2013

We analyze the effect of a bankruptcy law according to which some of the borrower’s assets are exempt from liquidation … – according to personal bankruptcy US State laws prior to 2005 federal reform – in order to identify the signaling role played by …

Persistent link: https://www.econbiz.de/10010860652

How to sell a (bankrupt) company?

Cornelli, Francesca; Felli, Leonardo - London School of Economics (LSE) - 2010

The restructuring of a bankrupt company often entails the sale of such company. This paper suggests a way to sell the company that maximizes the creditors’ proceeds. The key to this proposal is the option left to the creditors to retain a fraction of the shares of the company. Indeed, by...

Persistent link: https://www.econbiz.de/10011071365

Bankruptcy choice with endogenous financial constraints

Tamayo, Cesar E. - 2017

-trivial choice between alternative bankruptcy procedures. Given limited commitment and asymmetric information, financial contracts … monitoring is too costly, renegotiation leads to reorganization, which resembles actual bankruptcy practice. We calibrate the … model to match certain aspects of the data on bankruptcy and firm dynamics in the United States. Our counterfactual …

Persistent link: https://www.econbiz.de/10011673284