A balance sheet structure including fixed assets, net working capital and risky long-term debt leads to a model for option pricing of the firm’s equity. Each of the financial components constitutes a source of risk. A hedge based on three distinct options and the stock enables risk neutral valuation and avoids the problems of lack of tradability of the assets and market incompleteness reflected...

We examine the effect of introducing credit default swaps (CDSs) on firms’ investment and financing policies. Our model allows for dynamic investment and dynamic financing using equity and debt, and debt holders can trade in the CDS market. After calibrating the model, we compare an economy with a CDS market to an economy without one. The model contains both positive and negative effects of CDS...

One potential consequence of rising concentration of income at the top of the distribution is increased borrowing, as less affluent households attempt to maintain standards of living with less income. This paper explores the “keeping up with the Joneses” phenomenon using data from the Survey of Consumer Finances. Specifically, it examines the responsiveness of payment-toincome ratios for differ...

This paper analyzes the determinants of secondary debt market liquidity, identifying conditions under which trading in competitive markets results in sufficient ownership concentration to induce ex post efficient debt relief. The feasibility of debt relief is path-dependent, hinging upon interim economic conditions. Secondary debt markets are likely to freeze during recessions, precisely when t...

We examine whether a firm’s debt maturity structure affects its credit quality. We find that firms with a larger proportion of their debt maturing within the year (short-term debt) are more likely to experience a severe fall in their credit quality in the following year, as measured by the severity of credit rating downgrades and the propensity to default. This effect is stronger for firms with...

The COVID-19 pandemic is affecting the economy. These economic activities affect of companies or industries, one which commercial in field agricultural and food products, namely PT. Charoen Pokphand Tbk. This industry an agribusiness that produces animal feed, day-old chicks (DOC), ready-to-eat foods. study was conducted during closing period 2019 2020 using quantitative research methods. data ...

This paper sets out to explore the potential of sub-sovereign bonds in financing infrastructure in developing countries. Taking into account the historical experience of the US, it develops a supply and demand side framework for analysis of the market for sub-sovereign bonded debt in developing countries and applies this framework to Mexico, India and South Africa. Finally, it draws lessons for...

We study the effects of sell-side debt research on price formation and investor behavior in debt and equity markets. Sell-side corporate debt research involves the production and dissemination of information by sell-side analysts to debt investors. Our sample includes 921 companies with publicly traded bonds and equity over the period from 2002 through 2004, with 429 of them being the subject o...