Optimal capital structure and bankruptcy choice: Dynamic bargaining versus liquidation

• 成果类型: Article
• 署名作者: Antill, Samuel; Grenadier, Steven R.
• 署名单位: Stanford University
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2018.05.012
• 发表日期: 2019
• 页码: 198-224
• 关键词: capital structure; bankruptcy; default; Dynamic bargaining

摘要

We model a firm's optimal capital structure decision in a framework in which it may later choose to enter either Chapter 11 reorganization or Chapter 7 liquidation. Creditors anticipate equityholders' ex-post reorganization incentives and price them into the ex-ante credit spreads. Using a realistic dynamic bargaining model of reorganization, we show that the off-equilibrium threat of costly renegotiation can lead to lower leverage, even with liquidation in equilibrium. If reorganization is less efficient than liquidation, the added option of reorganization can actually make equityholders worse off ex-ante, even when they liquidate on the equilibrium path. (C) 2019 Elsevier B.V. All rights reserved.