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Debt covenant renegotiation and investment
Arnold, Marc; Westermann, Ramona - 2015
This paper develops a model with the novel feature that firms can renegotiate debt both in and outside distress. We show that this feature is crucial for debt renegotiation models to explain corporate policies and debt prices. Specifically, the model reflects empirical credit spread patterns,...
Persistent link: https://www.econbiz.de/10011345070
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Relationship capital and financing decisions
Geelen, Thomas; Morellec, Erwan; Rostova, Natalia - 2021
Lending relationships matter for firm financing. In a model of debt dynamics, we study how lending relationships are formed and how they impact leverage and debt maturity choices. In the model, lending relationships evolve through repeated interactions between firms and debt investors. Stronger...
Persistent link: https://www.econbiz.de/10012612803
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Asymmetric Information, Debt Capacity, and Capital Structure
Lemmon, Michael L. - 2016
A theory of capital structure in which costs associated with asymmetric information are the sole friction is used to … present a new perspective on the standard pecking order theory. In the model, both the amount of debt and the restrictiveness …
Persistent link: https://www.econbiz.de/10013007928
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Asymmetric Information, Debt Capacity, and Capital Structure
Lemmon, Michael L. - 2016
We present a tradeoff theory of capital structure in which costs associated with asymmetric information are the sole …
Persistent link: https://www.econbiz.de/10013008199
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The Commitment Role of Equity Financing
Fahn, Matthias - 2014
theory are in line with a number of empirical results, which seem to stay in contrast to existing theories on capital …
Persistent link: https://www.econbiz.de/10013051377
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Firm Leverage and Investment Decisions in an Emerging Market
Umutlu, Mehmet - 2010
In this study, the effect of leverage on investment is analyzed by employing panel data methods for the Turkish non-financial firms that are quoted on İstanbul Stock Exchange. For one-way error component models, it is shown that there is a negative impact of leverage on investment for only...
Persistent link: https://www.econbiz.de/10014203083
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Why Do Firms Issue Secured Debt?
Bao, Jack - 2016
We empirically examine theories of secured debt. Credit risk and asset volatility increase with secured debt issuance, and the strength of this association is unrelated to contemporaneous investment. Hand-collected data reveals most secured debt is secured on all assets of the firm and rarely...
Persistent link: https://www.econbiz.de/10013005724
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Financial Crises, Debt Financing, and Default Risk
Chiu, Wan-Chien - 2015
significant for firms with low credit quality. These findings suggest that the bank supply shock theory helps explain the …
Persistent link: https://www.econbiz.de/10013028200
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Convertible Debt Issuance & Target Leverage Adjustments
Eldemire-Poindexter, Ashleigh - 2016
I study the target leverage and partial adjustment activity of firms that issue convertible bonds. Convertibles may help target adjustment efforts by lowering issuance transaction costs and reducing interest expenses. Nevertheless, convertible debt can increase liabilities for an unknown amount...
Persistent link: https://www.econbiz.de/10012983395
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Pecking Order Versus Trade Off Theory and the Issue of Debt Constraint Problem?
Vigneron, Ludovic - 2012
particularly on a sample of French quoted firms. The question is which one of pecking order or trade off theory can be considered … theory dominates pecking order for constrained firms whereas pecking order dominates trade off theory for unconstrained ones … difficult to distinguish which theory better fits …
Persistent link: https://www.econbiz.de/10013101235