Multiple Creditors and Information Rights: Theory and Evidence from US Firms
نویسندگان
چکیده
We analyze how a firm allocates information rights across its multiple banks. By differentiating their information, a firm prevents its banks from continuing projects only to use their superior information and seize assets during the reorganization. However, informational diversity can lead to the premature liquidation of good projects. We derive the optimal allocation of information as a function of the redeployability and the heterogeneity of the assets of the firm, and of the costs of restructuring the firm in distress. Using a sample of US firms, we find evidence that supports the empirical implications of the model.
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