Strategic debt service

• 成果类型: Article
• 署名作者: MellaBarral, P; Perraudin, W
• 署名单位: University of London; Birkbeck University London
• 刊物名称: JOURNAL OF FINANCE
• ISSN/ISSBN: 0022-1082
• DOI: 10.1111/j.1540-6261.1997.tb04812.x
• 发表日期: 1997
• 页码: 531-556
• 关键词: capital structure; corporate-debt; securities; decisions; FIRMS; MODEL

摘要

When firms experience financial distress, equity holders may act strategically, forcing concessions from debtholders and paying less than the originally-contracted interest payments. This article incorporates strategic debt service in a standard, continuous time asset pricing model, developing simple closed-form expressions for debt and equity values. We find that strategic debt service can account for a substantial proportion of the premium on risky corporate debt. We analyze the efficiency implications of strategic debt service, showing that it can eliminate both direct bankruptcy costs and agency costs of debt.