- Títol:
- Contractual resolutions of financial distress
- Autors:
- Nicola Gennaioli i Stefano Rossi
- Data:
- Novembre 2006 (Revisió: Maig 2012)
- Resum:
- In a financial contracting model, we study the optimal debt structure to resolve financial distress. We
show that a debt structure where two distinct debt classes co-exist - one class fully concentrated and
with control rights upon default, the other dispersed and without control rights - removes the controlling
creditor's liquidation bias when investor protection is strong. These results rationalize the use and the
performance of floating charge financing, debt financing where the controlling creditor takes the entire
business as collateral, in countries with strong investor protection. Our theory predicts that the efficiency of
contractual resolutions of financial distress should increase with investor protection.
- Paraules clau:
- Financial Distress, Investor Protection, Financial Contracting
- Codis JEL:
- G33, K22
- Àrea de Recerca:
- Macroeconomia i Economia Internacional
- Publicat a:
- The Review of Financial Studies, Forthcoming
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