Debt
Working Paper
A Theory of Preferred Stock
Should preferred stock be treated under corporate law as an equity interest in the issuing corporation or under contract law as a senior security? Should a preferred certificate of designation subsumed in the corporate charter and treated as an...Read more
Creditor Control Rights and Board Independence
We find that the number of independent directors on corporate boards increases by approximately 24% following financial covenant violations in credit agreements. Most of these new directors have links to creditors. Firms that appoint new...Read more
Bonded to the State: A Network Perspective on China?s Corporate Debt Market
A corporate bond market is thought to play an important role as a supplement to bankoriented financial systems in emerging markets ? functioning in effect as a ?spare tire.? Yet bond markets typically rely upon a formal institutional foundation...Read more
Debt Structure as a Strategic Bargaining Tool
In this paper, I examine the strategic role of debt structure in improving the bargaining position of a firm’s management relative to its non-financial stakeholders. Debt structure is essential for strategic bargaining because it affects the ease...Read more
The New Bond Workouts
Bond workouts are a famously dysfunctional method of debt restructuring, ridden with opportunistic and coercive behavior by bondholders and bond issuers. Yet since 2008 bond workouts have quietly started to work. A cognizable portion of the...Read more
The Bond Market Benefits of Corporate Social Capital
We investigate whether a firm’s social capital, and the trust that it engenders, are viewed favorably by bondholders. Using firms’ corporate social responsibility (CSR) activities to proxy for social capital, we find...Read more
Underwriter Competition and Bargaining Power in the Corporate Bond Market
We study the impact of underwriter competition on corporate bond contracts. We develop a new measure of underwriter power and a novel empirical approach, based on the underwriter’s comparative ability to place bonds. When an issuer has few "...Read more
Is it Worthwhile to Augment the Legal Protection of Public Debt Placed by Privately Held Companies?
We examine the effects of a law amendment in Israel in 2011 that imposes a set of minimum corporate governance standards on privately held firms that issue publicly traded bonds. Two main results emerge. First, consistent with US evidence, the...Read more
Fiduciary Duties and Equity-Debtholder Conflicts
We use an important legal event as a natural experiment to examine the effect of management fiduciary duties on equity-debt conflicts. A 1991 Delaware bankruptcy ruling changed the nature of corporate directors’ fiduciary duties in firms...Read more
Smart Buyers
We study transactions in which sellers fears being underpaid because their outside option is better known to the buyer. We rationalize various observed contracts as solutions to such smart buyer problems. Key to these solutions is granting the...Read more
The Eclipse of Private Equity
Private equity, characterized by firms operating as privately held partnerships organizing the acquisition and "taking private" of public companies, is currently dominating the business news due to deals growing rapidly in number and size. If the...Read more