With currently depressed milk prices, many Michigan dairy operations are struggling to meet current cash flow commitments. This article, the first of a series of articles addressing cash flow problems, examines ways to manage debt. The other articles to follow will explore profitability of the Michigan dairy industry, other methods for improving cash flow (including income tax management), unde...

An important inefficiency in sovereign debt markets is debt dilution, wherein sovereigns ignore the adverse impact of new debt on the value of existing debt and, consequently, borrow too much and default too frequently. A widely proposed remedy is the inclusion of seniority clause in sovereign debt contracts: Creditors who lent first have priority in any restructuring proceedings. We incorporat...

Insignificant stock market reactions to debt issues have been well documented in the finance literature. This paper segments debt issues into callable/noncallable and long-term/short-term categories, as well as anticipated and unanticipated issues (8 different categories of debt). A logit model was used to classify the debt issues into anticipated and unanticipated categories. Stock market reac...

An important source of inefficiency in long-term debt contracts is the debt dilution problem, wherein a country or firm ignores the adverse impact of new borrowing on the market value of outstanding debt and, therefore, borrows too much and defaults too frequently. A commonly proposed remedy to the debt dilution problem is seniority of debt, wherein creditors who lent first are given priority i...

BACKGROUND Compared to OECD countries, Israel has a remarkably low percentage of GDP and of government expenditure spent on health, which are not reflected in worse national outcomes. Israel is also characterized by a relatively high share of GDP spent on security expenses and payment of public debt. OBJECTIVES To determine to what extent differences between Israel and the OECD countries in s...

We present a continuous time model of sovereign debt with the possibility to renegotiate once the terms of the contract. Renegotiations consist of a debt reduction or a debt rescheduling. The model provides closed-form solutions for debt values with endogenous default policy and renegotiations terms. Simulations indicate that both reduction and rescheduling deals allow the lender and the sovere...

We examine the importance of what we term ‘Fisher dynamics’the mechanical effects of changes in interest rates, growth rates and inflation rates on debt levels independent of borrowing -for the evolution of household debt in the U.S. over a long time horizon (19292011). Adapting a standard decomposition of public debt to household sector debt, we show that these factors have been important in e...

Introduction: the EU and national industrial relations A paradox has emerged in the last two decades in Europe. Interest in comparing employment relations has increased, under international pressure to increase productivity, employment rates and competitiveness and to attract foreign investors and foreign skilled workers. International organisations, governments, trade unions, multinational com...

We examine the relation between a borrowing firm’s ownership structure and its choice of debt source using a novel, hand-collected data set on corporate ownership, control and debt structures for 9,831 firms in 20 countries from 2001 to 2010. We find that the divergence between control rights and cash-flow rights of a borrowing firm’s largest ultimate owner has a significant impact on the firm’...