Repurchasing Debt

• 成果类型: Article
• 署名作者: Mao, Lei; Tserlukevich, Yuri
• 署名单位: University of Warwick; Arizona State University; Arizona State University-Tempe
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2014.1965
• 发表日期: 2015
• 页码: 1648-1662
• 关键词: savings; debt repurchase; Debt overhang

摘要

In this paper we build a theoretical model of a firm repurchasing its corporate debt. We find that firm creditors as a group sell debt to the firm only at face value. However, because of the cross-creditor externalities, buying back debt is cheaper and easier when there are many creditors, e.g., when debt is traded on the open market. We further show that repurchases contribute to flexibility in firms' capital structure and can increase ex ante firm value. The value of repurchases to the shareholders increases with the firm's ability to save cash and delay the repurchase.