The role of high leverage in corporate restructuring, popularity of junk bonds (original-issue,
high-yield bonds) and the savings & loan crisis have been important aspects of the finance …

We identify a specific channel (debt covenants) and the corresponding mechanism (transfer
of control rights) through which financing frictions impact corporate investment. Using a …

This paper analyzes the ways in which financially distressed firms try to avoid bankruptcy
through public and private debt restructurings, asset sales, mergers, and capital expenditure …

We present novel empirical evidence that conflicts of interest between creditors and their
borrowers have a significant impact on firm investment policy. We examine a large sample of …

This article empirically tests five structural models of corporate bond pricing: those of Merton
(1974), Geske (1977), Longstaff and Schwartz (1995), Leland and Toft (1996), and Collin …

The unique characteristics of bank loans emerge endogenously to enhance efficiency in a
model of renegotiation between a borrower and a lender in which there is the potential for …

Bankruptcy is the legal process whereby financially distressed firms, individuals, and
occasionally governments resolve their debts. The bankruptcy process for firms plays a …

Research on corporate financial distress is relatively young in comparison to knowledge
about mechanisms and processes in sound enterprises. Large failures and corporate …

Granting collateral to secure loans is a dominant feature of this country's commerce:
domestic lenders currently hold about two trillion dollars in secured debt. This chapter relies …

Are restrictive covenants effective mechanisms in mitigating agency problems? Is the
magnitude of the increase in the cost of debt due to agency problems non-trivial? We tackle …