منابع مشابه
Underinvestment, Capital Structure and Strategic Debt Restructuring∗
In this paper the investment and liquidation policy of a levered firm is analyzed. The possibility of renegotiating the original debt contract is included. It is shown that the shareholders’ option to restructure the outstanding debt exacerbates Myers’ (1977) underinvestment problem. This result is due to a higher wealth transfer from the shareholders to the creditors occurring upon investment ...
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This paper investigates the impact of asset liquidity on the valuation of corporate securities and the firm’s financing decisions. I show that asset liquidity increases debt capacity only when bond covenants restrict the disposition of assets. By contrast, I demonstrate that, with unsecured debt, greater liquidity increases credit spreads on corporate debt and reduces optimal leverage. The mode...
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We model dynamic investment, financing and default decisions of a firm, which begins its life with a collection of growth options. The firm exercises them optimally over time, and finances the costs of investment by adjusting its capital structure, which trades off the tax benefits with the distress cost of debt and the agency cost of investment distortions from potential debt overhang. Conflic...
متن کاملDebt Servicing Costs and Capital Structure
In contrast to the standard capital structure theory prediction that builds on a trade-o¤ between interest tax shields and expected bankruptcy costs, public rms use debt quite conservatively. To address this well known debt conservatism puzzle (Graham 2000), I argue that servicing debt drains valuable liquidity for a nancially constrained rm and hence endogenously creates debt servicing cos...
متن کاملDynamic Capital Structure with Callable Debt and Debt Renegotiations
We consider a dynamic model of the capital structure of a firm with callable debt that takes into account that equity holders and debt holders have a common interest in restructuring the firm’s capital structure in order to avoid bankruptcy costs. Far away from the bankruptcy threat the equity holders use the call feature of the debt to replace the existing debt in order to increase the tax adv...
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ژورنال
عنوان ژورنال: SSRN Electronic Journal
سال: 2010
ISSN: 1556-5068
DOI: 10.2139/ssrn.1097577