Cost Of Financial Distress

  cost of financial distress: Corporate Financial Distress, Restructuring, and Bankruptcy Edward I. Altman, Edith Hotchkiss, Wei Wang, 2019-03-26 A comprehensive look at the enormous growth and evolution of distressed debt markets, corporate bankruptcy, and credit risk models This Fourth Edition of the most authoritative finance book on the topic updates and expands its discussion of financial distress and bankruptcy, as well as the related topics dealing with leveraged finance, high-yield, and distressed debt markets. It offers state-of-the-art analysis and research on U.S. and international restructurings, applications of distress prediction models in financial and managerial markets, bankruptcy costs, restructuring outcomes, and more.
  cost of financial distress: Corporate Financial Distress and Bankruptcy Edward I. Altman, Edith Hotchkiss, 2010-03-11 A comprehensive look at the enormous growth and evolution of distressed debt, corporate bankruptcy, and credit risk default This Third Edition of the most authoritative finance book on the topic updates and expands its discussion of corporate distress and bankruptcy, as well as the related markets dealing with high-yield and distressed debt, and offers state-of-the-art analysis and research on the costs of bankruptcy, credit default prediction, the post-emergence period performance of bankrupt firms, and more.
  cost of financial distress: Financial Statement Analysis and the Prediction of Financial Distress William H. Beaver, Maria Correia, Maureen McNichols, 2011 Financial Statement Analysis and the Prediction of Financial Distress discusses the evolution of three main streams within the financial distress prediction literature: the set of dependent and explanatory variables used, the statistical methods of estimation, and the modeling of financial distress. Section 1 discusses concepts of financial distress. Section 2 discusses theories regarding the use of financial ratios as predictors of financial distress. Section 3 contains a brief review of the literature. Section 4 discusses the use of market price-based models of financial distress. Section 5 develops the statistical methods for empirical estimation of the probability of financial distress. Section 6 discusses the major empirical findings with respect to prediction of financial distress. Section 7 briefly summarizes some of the more relevant literature with respect to bond ratings. Section 8 presents some suggestions for future research and Section 9 presents concluding remarks.
  cost of financial distress: Corporate Governance Models and Applications in Developing Economies Agyemang, Otuo Serebour, Ansong, Abraham, Agyei-Mensah, Ben Kwame, 2019-08-30 Virtually all developing, transitioning, and emerging-market economies are faced with one pressing concern at the moment: how to establish the groundwork for long-term economic performance and competitiveness in a diverse market. However, without the existence of good corporate governance in these economies, small enterprise will cease to exist in developing countries. Corporate Governance Models and Applications in Developing Economies is a collection of innovative research that contributes to the better understanding of corporate governance models by documenting the structures, principles, tenets, case studies, and applications for the development of good business practices in developing economies. While highlighting topics including risk management, financial distress, and insider trading, this book is ideally designed for corporate managers, executives, economists, strategists, investors, shareholders, students, researchers, academicians, business professionals, and policymakers.
  cost of financial distress: Recovery Risk Edward I. Altman, Andrea Resti, Andrea Sironi, 2005-01-01 In this ground-breaking new title, Risk Books brings together three prominent editors to provide a timely reference text on loss given default (LGD) measurement and management and the requirements of the Basel II Capital Accord.
  cost of financial distress: Simulation-based Econometric Methods Christian Gouriéroux, Alain Monfort, 1997-01-09 This book introduces a new generation of statistical econometrics. After linear models leading to analytical expressions for estimators, and non-linear models using numerical optimization algorithms, the availability of high- speed computing has enabled econometricians to consider econometric models without simple analytical expressions. The previous difficulties presented by the presence of integrals of large dimensions in the probability density functions or in the moments can be circumvented by a simulation-based approach. After a brief survey of classical parametric and semi-parametric non-linear estimation methods and a description of problems in which criterion functions contain integrals, the authors present a general form of the model where it is possible to simulate the observations. They then move to calibration problems and the simulated analogue of the method of moments, before considering simulated versions of maximum likelihood, pseudo-maximum likelihood, or non-linear least squares. The general principle of indirect inference is presented and is then applied to limited dependent variable models and to financial series.
  cost of financial distress: Derivative Securities Robert A. Jarrow, Robert Jarrow, Stuart McLean Turnbull, 1996 Accessible and intuitive, Derivative Securities offers advanced undergraduates, MBA students, and executives the theory and practical tools needed to price and hedge derivatives in the professional marketplace. Written by two of the foremost derivative pricing experts in the world, this text makes the theory and practice of pricing and hedging derivative securities accessible without watering down the material. Presentation is complete yet avoids advanced mathematics. Equal coverage is given to options pricing theory and futures pricing theory, and cutting-edge derivatives research is incorporated throughout. Derivatives pricing software is bound with each text.
  cost of financial distress: Distressed Debt Analysis Stephen G. Moyer, 2004-11-15 Providing theoretical and practical insight, this book presents a conceptual, but not overly technical, outline of the financial and bankruptcy law context in which restructurings take place. The author uses numerous real- world examples to demonstrate concepts and critical issues. Readers will understand the chess-like, multi- move strategies necessary to achieve financially advantageous results.
  cost of financial distress: Credit Risk Modeling David Lando, 2009-12-13 Credit risk is today one of the most intensely studied topics in quantitative finance. This book provides an introduction and overview for readers who seek an up-to-date reference to the central problems of the field and to the tools currently used to analyze them. The book is aimed at researchers and students in finance, at quantitative analysts in banks and other financial institutions, and at regulators interested in the modeling aspects of credit risk. David Lando considers the two broad approaches to credit risk analysis: that based on classical option pricing models on the one hand, and on a direct modeling of the default probability of issuers on the other. He offers insights that can be drawn from each approach and demonstrates that the distinction between the two approaches is not at all clear-cut. The book strikes a fruitful balance between quickly presenting the basic ideas of the models and offering enough detail so readers can derive and implement the models themselves. The discussion of the models and their limitations and five technical appendixes help readers expand and generalize the models themselves or to understand existing generalizations. The book emphasizes models for pricing as well as statistical techniques for estimating their parameters. Applications include rating-based modeling, modeling of dependent defaults, swap- and corporate-yield curve dynamics, credit default swaps, and collateralized debt obligations.
  cost of financial distress: Investment Valuation Aswath Damodaran, 2002-01-31 Valuation is a topic that is extensively covered in business degree programs throughout the country. Damodaran's revisions to Investment Valuation are an addition to the needs of these programs.
  cost of financial distress: Accounting discretion of banks during a financial crisis Mr.Luc Laeven, Harry Huizinga, 2009-09-01 This paper shows that banks use accounting discretion to overstate the value of distressed assets. Banks' balance sheets overvalue real estate-related assets compared to the market value of these assets, especially during the U.S. mortgage crisis. Share prices of banks with large exposure to mortgage-backed securities also react favorably to recent changes in accounting rules that relax fair-value accounting, and these banks provision less for bad loans. Furthermore, distressed banks use discretion in the classification of mortgage-backed securities to inflate their books. Our results indicate that banks' balance sheets offer a distorted view of the financial health of the banks.
  cost of financial distress: Treasurer's Handbook John Fred Weston, Maurice B. Goudzwaard, 1976
  cost of financial distress: Distressed Investment Banking Henry Furlow Owsley, Peter S. Kaufman, 2005 The definitive work on the role of the investment banker in a troubled company situation.
  cost of financial distress: Empirical Capital Structure Christopher Parsons, Sheridan Titman, 2009 Empirical Capital Structure reviews the empirical capital structure literature from both the cross-sectional determinants of capital structure as well as time-series changes.
  cost of financial distress: Delivering Affordable Cancer Care in the 21st Century Institute of Medicine, Board on Health Care Services, National Cancer Policy Forum, 2013-06-20 Rising health care costs are a central fiscal challenge confronting the United States. National spending on health care currently accounts for 18 percent of gross domestic product (GDP), but is anticipated to increase to 25 percent of GDP by 2037. The Bipartisan Policy Center argues that this rapid growth in health expenditures creates an unsustainable burden on America's economy, with far-reaching consequences. These consequences include crowding out many national priorities, including investments in education, infrastructure, and research; stagnation of employee wages; and decreased international competitiveness.In spite of health care costs that far exceed those of other countries, health outcomes in the United States are not considerably better. With the goal of ensuring that patients have access to high-quality, affordable cancer care, the Institute of Medicine's (IOM's) National Cancer Policy Forum convened a public workshop, Delivering Affordable Cancer Care in the 21st Century, October 8-9, 2012, in Washington, DC. Delivering Affordable Cancer Care in the 21st Century summarizes the workshop.
  cost of financial distress: Advanced Corporate Finance Wajeeh Elali, Therese Trainor, 2008-03-14 Clearly written and example oriented, Advanced Corporate Finance: A Practical Approach presents the latest innovations of corporate finance in an engaging and student-friendly manner. Each chapter is filled with a wide range of minicases, numerical examples, conceptual questions and feature articles meant to help you understand the theories and practical applications of corporate finance.
  cost of financial distress: Damodaran on Valuation Aswath Damodaran, 2016-02-08 Aswath Damodaran is simply the best valuation teacher around. If you are interested in the theory or practice of valuation, you should have Damodaran on Valuation on your bookshelf. You can bet that I do. -- Michael J. Mauboussin, Chief Investment Strategist, Legg Mason Capital Management and author of More Than You Know: Finding Financial Wisdom in Unconventional Places In order to be a successful CEO, corporate strategist, or analyst, understanding the valuation process is a necessity. The second edition of Damodaran on Valuation stands out as the most reliable book for answering many of today?s critical valuation questions. Completely revised and updated, this edition is the ideal book on valuation for CEOs and corporate strategists. You'll gain an understanding of the vitality of today?s valuation models and develop the acumen needed for the most complex and subtle valuation scenarios you will face.
  cost of financial distress: Corporate Bankruptcy Jagdeep S. Bhandari, Lawrence A. Weiss, 1996-03-29 This collection is the first comprehensive selection of readings focusing on corporate bankruptcy. Its main purpose is to explore the nature and efficiency of corporate reorganization using interdisciplinary approaches drawn from law, economics, business, and finance. Substantive areas covered include the role of credit, creditors' implicit bargains, nonbargaining features of bankruptcy, workouts of agreements, alternatives to bankruptcy, and proceedings in countries including the United States, United Kingdom, Europe, and Japan. The Honorable Richard A. Posner, Chief Judge of the U.S. Court of Appeals for the Seventh Circuit, offers a foreword to the collection.
  cost of financial distress: Global Waves of Debt M. Ayhan Kose, Peter Nagle, Franziska Ohnsorge, Naotaka Sugawara, 2021-03-03 The global economy has experienced four waves of rapid debt accumulation over the past 50 years. The first three debt waves ended with financial crises in many emerging market and developing economies. During the current wave, which started in 2010, the increase in debt in these economies has already been larger, faster, and broader-based than in the previous three waves. Current low interest rates mitigate some of the risks associated with high debt. However, emerging market and developing economies are also confronted by weak growth prospects, mounting vulnerabilities, and elevated global risks. A menu of policy options is available to reduce the likelihood that the current debt wave will end in crisis and, if crises do take place, will alleviate their impact.
  cost of financial distress: Financial Crises Explanations, Types, and Implications Mr.Stijn Claessens, Mr.Ayhan Kose, 2013-01-30 This paper reviews the literature on financial crises focusing on three specific aspects. First, what are the main factors explaining financial crises? Since many theories on the sources of financial crises highlight the importance of sharp fluctuations in asset and credit markets, the paper briefly reviews theoretical and empirical studies on developments in these markets around financial crises. Second, what are the major types of financial crises? The paper focuses on the main theoretical and empirical explanations of four types of financial crises—currency crises, sudden stops, debt crises, and banking crises—and presents a survey of the literature that attempts to identify these episodes. Third, what are the real and financial sector implications of crises? The paper briefly reviews the short- and medium-run implications of crises for the real economy and financial sector. It concludes with a summary of the main lessons from the literature and future research directions.
  cost of financial distress: The Financial Crisis Inquiry Report Financial Crisis Inquiry Commission, 2011-05-01 The Financial Crisis Inquiry Report, published by the U.S. Government and the Financial Crisis Inquiry Commission in early 2011, is the official government report on the United States financial collapse and the review of major financial institutions that bankrupted and failed, or would have without help from the government. The commission and the report were implemented after Congress passed an act in 2009 to review and prevent fraudulent activity. The report details, among other things, the periods before, during, and after the crisis, what led up to it, and analyses of subprime mortgage lending, credit expansion and banking policies, the collapse of companies like Fannie Mae and Freddie Mac, and the federal bailouts of Lehman and AIG. It also discusses the aftermath of the fallout and our current state. This report should be of interest to anyone concerned about the financial situation in the U.S. and around the world.THE FINANCIAL CRISIS INQUIRY COMMISSION is an independent, bi-partisan, government-appointed panel of 10 people that was created to examine the causes, domestic and global, of the current financial and economic crisis in the United States. It was established as part of the Fraud Enforcement and Recovery Act of 2009. The commission consisted of private citizens with expertise in economics and finance, banking, housing, market regulation, and consumer protection. They examined and reported on the collapse of major financial institutions that failed or would have failed if not for exceptional assistance from the government.News Dissector DANNY SCHECHTER is a journalist, blogger and filmmaker. He has been reporting on economic crises since the 1980's when he was with ABC News. His film In Debt We Trust warned of the economic meltdown in 2006. He has since written three books on the subject including Plunder: Investigating Our Economic Calamity (Cosimo Books, 2008), and The Crime Of Our Time: Why Wall Street Is Not Too Big to Jail (Disinfo Books, 2011), a companion to his latest film Plunder The Crime Of Our Time. He can be reached online at www.newsdissector.com.
  cost of financial distress: Approaching Death Committee on Care at the End of Life, Institute of Medicine, 1997-10-30 When the end of life makes its inevitable appearance, people should be able to expect reliable, humane, and effective caregiving. Yet too many dying people suffer unnecessarily. While an overtreated dying is feared, untreated pain or emotional abandonment are equally frightening. Approaching Death reflects a wide-ranging effort to understand what we know about care at the end of life, what we have yet to learn, and what we know but do not adequately apply. It seeks to build understanding of what constitutes good care for the dying and offers recommendations to decisionmakers that address specific barriers to achieving good care. This volume offers a profile of when, where, and how Americans die. It examines the dimensions of caring at the end of life: Determining diagnosis and prognosis and communicating these to patient and family. Establishing clinical and personal goals. Matching physical, psychological, spiritual, and practical care strategies to the patient's values and circumstances. Approaching Death considers the dying experience in hospitals, nursing homes, and other settings and the role of interdisciplinary teams and managed care. It offers perspectives on quality measurement and improvement, the role of practice guidelines, cost concerns, and legal issues such as assisted suicide. The book proposes how health professionals can become better prepared to care well for those who are dying and to understand that these are not patients for whom nothing can be done.
  cost of financial distress: As We Forgive Our Debtors Teresa A. Sullivan, Elizabeth Warren, Jay Lawrence Westbrook, 1999 Bankruptcy in America is a booming business, with hundreds of thousands of ordinary Americans filing for bankruptcy each year. Is this dramatic growth a result of mushrooming debt or does it reflect a moral decline that permits the middle class to evade their debts? As We Forgive Our Debtors addresses these questions with hard empirical data drawn from bankruptcy court filings. The authors of this multidisciplinary study describe the law and the statistics in clear, nontechnical language, combining a thorough statistical description of the social and economic position of consumer bankrupts with human portraits of the debtors and creditors whose journeys have ended in bankruptcy court. Book jacket.
  cost of financial distress: Liquidity Risk E. Banks, 2013-11-06 Liquidity Management is now a core consideration for banks and other financial institutions following the collapse of numerous well-known banks in 2007-8. This timely new edition will provide practical guidance on liquidity risk and its management – now mandatory under new regulation.
  cost of financial distress: Corporate Capital Structures in the United States Benjamin M. Friedman, 2009-05-15 The research reported in this volume represents the second stage of a wide-ranging National Bureau of Economic Research effort to investigate The Changing Role of Debt and Equity in Financing U.S. Capital Formation. The first group of studies sponsored under this project, which have been published individually and summarized in a 1982 volume bearing the same title (Friedman 1982), addressed several key issues relevant to corporate sector behavior along with such other aspects of the evolving financial underpinnings of U.S. capital formation as household saving incentives, international capital flows, and government debt management. In the project's second series of studies, presented at the National Bureau of Economic Research conference in January 1983 and published here for the first time along with commentaries from that conference, the central focus is the financial side of capital formation undertaken by the U.S. corporate business sector. At the same time, because corporations' securities must be held, a parallel focus is on the behavior of the markets that price these claims.
  cost of financial distress: Crashed Adam Tooze, 2018-08-07 WINNER OF THE LIONEL GELBER PRIZE A NEW YORK TIMES NOTABLE BOOK OF 2018 ONE OF THE ECONOMIST'S BOOKS OF THE YEAR A NEW YORK TIMES CRITICS' TOP BOOK An intelligent explanation of the mechanisms that produced the crisis and the response to it...One of the great strengths of Tooze's book is to demonstrate the deeply intertwined nature of the European and American financial systems.--The New York Times Book Review From the prizewinning economic historian and author of Shutdown and The Deluge, an eye-opening reinterpretation of the 2008 economic crisis (and its ten-year aftermath) as a global event that directly led to the shockwaves being felt around the world today. We live in a world where dramatic shifts in the domestic and global economy command the headlines, from rollbacks in US banking regulations to tariffs that may ignite international trade wars. But current events have deep roots, and the key to navigating today’s roiling policies lies in the events that started it all—the 2008 economic crisis and its aftermath. Despite initial attempts to downplay the crisis as a local incident, what happened on Wall Street beginning in 2008 was, in fact, a dramatic caesura of global significance that spiraled around the world, from the financial markets of the UK and Europe to the factories and dockyards of Asia, the Middle East, and Latin America, forcing a rearrangement of global governance. With a historian’s eye for detail, connection, and consequence, Adam Tooze brings the story right up to today’s negotiations, actions, and threats—a much-needed perspective on a global catastrophe and its long-term consequences.
  cost of financial distress: Capital Structure and Corporate Financing Decisions H. Kent Baker, Gerald S. Martin, 2011-03-31 A comprehensive guide to making better capital structure and corporate financing decisions in today's dynamic business environment Given the dramatic changes that have recently occurred in the economy, the topic of capital structure and corporate financing decisions is critically important. The fact is that firms need to constantly revisit their portfolio of debt, equity, and hybrid securities to finance assets, operations, and future growth. Capital Structure and Corporate Financing Decisions provides an in-depth examination of critical capital structure topics, including discussions of basic capital structure components, key theories and practices, and practical application in an increasingly complex corporate world. Throughout, the book emphasizes how a sound capital structure simultaneously minimizes the firm's cost of capital and maximizes the value to shareholders. Offers a strategic focus that allows you to understand how financing decisions relates to a firm's overall corporate policy Consists of contributed chapters from both academics and experienced professionals, offering a variety of perspectives and a rich interplay of ideas Contains information from survey research describing actual financial practices of firms This valuable resource takes a practical approach to capital structure by discussing why various theories make sense and how firms use them to solve problems and create wealth. In the wake of the recent financial crisis, the insights found here are essential to excelling in today's volatile business environment.
  cost of financial distress: Corporate Financial Distress and Bankruptcy Lemma W. Senbet, Tracy Yue Wang, 2012-08 Corporate Financial Distress and Bankruptcy has moved into a public domain due to the recent global financial crisis that witnessed failures of many corporations that were rescued by the government. This survey will highlight the resolution mechanisms for corporate financial distress and bankruptcy not only in the private domain but also in the public domain and will use corporate finance paradigms to interpret some of these far-reaching developments in financial distress of systemic nature.
  cost of financial distress: Evaluating the Performance of Merger Simulation Craig Peters, 2003
  cost of financial distress: Adolescence and Emerging Adulthood Jeffrey Jensen Arnett, 2013 Helps students understand how culture impacts development in adolescence and emerging adulthood. Grounded in a global cultural perspective (within and outside of the US), this text enriches the discussion with historical context and an interdisciplinary approach, including studies from fields such as anthropology and sociology, in addition to the compelling psychological research on adolescent development. This book also takes into account the period of emerging adulthood (ages 18-25), a term coined by the author, and an area of study for which Arnett is a leading expert. Arnett continues the fifth edition with new and updated studies, both U.S. and international. With Pearson's MyDevelopmentLab Video Series and Powerpoints embedded with video, students can experience a true cross-cultural experience. A better teaching and learning experience This program will provide a better teaching and learning experience-- for you and your students. Here's how: Personalize Learning - The new MyDevelopmentLab delivers proven results in helping students succeed, provides engaging experiences that personalize learning, and comes from a trusted partner with educational expertise and a deep commitment to helping students and instructors achieve their goals. Improve Critical Thinking - Students learn to think critically about the influence of culture on development with pedagogical features such as Culture Focus boxes and Historical Focus boxes. Engage Students - Arnett engages students with cross cultural research and examples throughout. MyVirtualTeen, an interactive simulation, allows students to apply the concepts they are learning to their own virtual teen. Explore Research - Research Focus provides students with a firm grasp of various research methods and helps them see the impact that methods can have on research findings. Support Instructors - This program provides instructors with unbeatable resources, including video embedded PowerPoints and the new MyDevelopmentLab that includes cross-cultural videos and MyVirtualTeen, an interactive simulation that allows you to raise a child from birth to age 18. An easy to use Instructor's Manual, a robust test bank, and an online test generator (MyTest) are also available. All of these materials may be packaged with the text upon request. Note: MyDevelopmentLab does not come automatically packaged with this text. To purchase MyDevelopmentLab, please visit: www.mydevelopmentlab.com or you can purchase a ValuePack of the text + MyDevelopmentlab (at no additional cost): ValuePack ISBN-10: 0205911854/ ValuePack ISBN-13: 9780205911851. Click here for a short walkthrough video on MyVirtualTeen! http://www.youtube.com/playlist'list=PL51B144F17A36FF25&feature=plcp
  cost of financial distress: State of The Global Workplace Gallup, 2017-12-19 Only 15% of employees worldwide are engaged at work. This represents a major barrier to productivity for organizations everywhere – and suggests a staggering waste of human potential. Why is this engagement number so low? There are many reasons — but resistance to rapid change is a big one, Gallup’s research and experience have discovered. In particular, organizations have been slow to adapt to breakneck changes produced by information technology, globalization of markets for products and labor, the rise of the gig economy, and younger workers’ unique demands. Gallup’s 2017 State of the Global Workplace offers analytics and advice for organizational leaders in countries and regions around the globe who are trying to manage amid this rapid change. Grounded in decades of Gallup research and consulting worldwide -- and millions of interviews -- the report advises that leaders improve productivity by becoming far more employee-centered; build strengths-based organizations to unleash workers’ potential; and hire great managers to implement the positive change their organizations need not only to survive – but to thrive.
  cost of financial distress: Financial Sector Crisis and Restructuring Carl-Johan Lindgren, Charles Enoch, Leslie Teo, 1999 An IMF paper reviewing the policy responses of Indonesia, Korea and Thailand to the 1997 Asian crisis, comparing the actions of these three countries with those of Malaysia and the Philippines. Although all judgements are still tentative, important lessons can be learned from the experiences of the last two years.
  cost of financial distress: Handbook of Oncology Social Work Grace Christ, Carolyn Messner, Lynn Behar, 2015-01-28 The development of this inaugural Handbook of Oncology Social Work: Psychosocial Care for People With Cancer provides a repository of the scope of oncology social workers' clinical practice, education, research, policy and program leadership in the psychosocial care of people with cancer and their families. It focuses on the unique synergy of social work perspectives, values, knowledge, and skills with the psychosocial needs of cancer patients, their families, and the health care systems in which they are treated. It addresses both the science and art of psychosocial care and identifies the increasing specialization of oncology social work related to its unique knowledge base, skills, role, and the progressive complexity of psychosocial challenges for patients with cancer. This Handbook equips the reader with all that we know today in oncology social work about patient and family centered care, distress screening, genetics, survivorship, care coordination, sociocultural and economic diversity, legal and ethical matters, clinical work with adults living with cancer, cancer across the lifespan, their caregivers and families, pediatrics, loss and grief, professional career development, leadership, and innovation. Our hope is that in reading this Handbook you will identify new areas where each of you can leave your mark as innovators and change agents in our evolving field of practice.
  cost of financial distress: Corporate Liquidity Kenneth L. Parkinson, Jarl G. Kallberg, Jarl B. Kallberg, 1993 Parkinson and Kallberg show corporations how to meet short-term objectives and improve relationships with outside credit institutions and banks. Corporate Liquidity is an essential guide for those actively involved in short-term corporate finance and also serves as a refresher for candidates studying for the Certified Cash Manager (CCM) exam.
  cost of financial distress: The Economics of Bankruptcy Reform Philippe Aghion, Oliver Hart, John Moore, 1992 We propose a new bankruptcy procedure. Initially, a firm's debts are cancelled, and cash and non-cash bids are solicited for the 'new (all-equity) firm. Former claimants are given shares, or options to buy shares, in the new firm on the basis of absolute priority. Options are exercised once the bids are in. Finally, a shareholder vote is taken to select one of the bids. In essence, our procedure is a variant on the U.S. Chapter 7, in which non-cash bids are possible; this allows for reorganization. We believe our scheme is superior to Chapter 11 since it is simpler, quicker, market-based, avoids conflicts, and places appropriate discipline on management.
  cost of financial distress: International Hospitality Management Richard Teare, Michael D. Olsen, 1992-01-01 This book aims to explore the theory and practice of corporate strategy in the international hospitality industry. Divided into four parts for easy reference (The international environment, Competitive strategies, Corporate structures and planning, Corporate systems) each part is introduced by one of the editors in conjunction with a leading international senior executive. This is intended to give the book a blend of theory and practice and demonstrates the real-life applications of corporate strategy. Each chapter includes minicases and assignments and suggestions for further reading. on hotel and catering courses. It should also be useful to practioners at senior management level.
  cost of financial distress: Accounting and Information Theory Baruch Lev, 1969
  cost of financial distress: A 'Wreckers Theory' of Financial Distress Ulf von Kalckreuth, 2016 In recent years, a number of papers have established a new empirical regularity. Stocks of distressed firms vastly underperform those of financially healthy firms. It is not necessary to attribute the negative excess returns of distressed firms to inefficient or irrational markets. We show that negative excess returns are the equilibrium outcome when a subset of participants is able to draw returns in kind from distressed companies. For firms close to bankruptcy, non-cash returns to ownership will be the dominant form of return to equity. If markets expect a contest for control, these returns will show up in stock valuation. The governance problem described here creates a link between the financial position of a firm and real allocation that may amplify macroeconomic real or financial shocks.
  cost of financial distress: Financial Stability Monitoring Tobias Adrian, Daniel M. Covitz, Nellie Liang, 2020 In a recently released New York Fed staff report, we present a forward-looking monitoring program to identify and track time-varying sources of systemic risk.
  cost of financial distress: Special Cases of Business Valuation Marco Vulpiani, 2014
The Risk-Adjusted Cost of Financial Distress - New York …
We propose a method-ology for the valuation of distress costs, which uses observed corporate bond spreads to estimate risk-adjusted probabilities of financial distress.

NBER WORKING PAPER SERIES THE RISK-ADJUSTED COST OF …
In this paper we argue that risk-adjustment matters for the valuation of financial distress costs, since financial distress is more likely to happen in bad times. Systematic distress risk implies …

Capital Structure: the effect of Costs of Financial Distress, …
When choosing the capital structure, managers must balance the benefits of debt (taxes) against the costs of debt (financial distress). Firms should choose more Debt as long as the …

The determinants of financial distress cost: A case of …
expected cost of FD in two steps: first, we measure the likelihood of financial distress (FDL), and then we calculate the expected loss of financial distress firms. In addition, we broaden our …

The Costs of Financial Distress across Industries
The Costs of Financial Distress across Industries Arthur Korteweg⁄ January 15, 2007 Abstract In this paper I estimate the market’s opinion of ex-ante costs of flnancial distress (CFD) from a …

Chapter 16: Financial Distress, Managerial Incentives, and …
Ex. Assume a firm has no cash but existing assets that have a 50% chance of paying $120 and a 50% chance of paying $80. A project costing $10 will provide an immediate risk-free payoff of …

The determinants of the costs of financial distress in SMEs
We propose a theoretical model that argues that the expected financial distress costs in small- and medium-sized enterprises (SMEs) result from the interaction of the financial distress …

The Risk-Adjusted Cost of Financial Distress - Finance …
We argue that risk premia affect the valuation of financial distress costs, because these costs are more likely to be incurred in bad times. We compute the NPV of distress costs using risk …

COST DISTRESS SCREENING AND CONVERSATION GUIDE
Financial cost distress describes the harmful personal financial burden faced by patients receiving medical care.1,2 This cost distress can span a range of adverse effects, including changes in …

How Costly is Financial (Not Economic) Distress? Evidence …
We present quantitative and qualitative estimates of the direct and indirect costs of financial distress and their determinants. We ~ ! estimate financial distress costs to be 10 to 20 percent …

Capital ratios and financial distress: lessons from the crisis
approximately 58 to 83 percent of banks that ultimately became distressed, at a cost of $280 billion to $540 billion in incremental capital raised and a reduction of 140 to 260 b.p. in ROE, all …

Cost of Capital, Firm Size and Financial Distress
Findings show cost of capital to relate significantly and negatively with FD. Cost of equity (Ke) rises with cost of debt (Kd). Interaction term cost of capital*firm size has no effect on FD. Kd …

FINANCIAL DISTRESS: CAUSES AND REMEDIES - INSPIRA
So, the PV cost of financial distress increases, the importance of the enterprise declines. Financial distress leads to starting sickness, basically resulting into closure of the unit,

The Influence of Cost of Equity on Financial Distress and Firm …
The purpose of this research is to find out whether the cost of equity can influence the occurrence of financial distress, which suffers a substantial reduction in firm value. The research variables …

The Risk-Adjusted Cost of Financial Distress - New York …
Financial distress is more likely to happen in bad times. The present value of distress costs therefore depends on risk premia. We estimate this value using risk-adjusted default …

How Large are Pre-Default Costs of Financial Distress?
We document that pre-default costs are on average equal to 6.5% of rm value per year. We show that pre-default costs account for a large fraction of total distress costs, approximately 68.5%.

The Risk-Adjusted Cost of Financial Distress
Our goal in this paper is to quantify the impact of distress risk premia on the NPV of distress costs.

How Costly is Financial (not Economic) Distress?
those papers measure costs of financial distress or economic distress. To address this second question, we first examine the factors that drive the sample firms into financial distress.

Expected cost of financial distress in small and medium-sized ...
Financial distress means severe liquidity problems that cannot be resolved without a sizable rescaling of the entity’s operations or structure (Foster, 2005). Financial distress refers to the …

The Risk-Adjusted Cost of Financial Distress - New York U…
We propose a method-ology for the valuation of distress costs, which uses observed corporate bond spreads to estimate risk-adjusted probabilities of financial distress.

NBER WORKING PAPER SERIES THE RISK-ADJUSTED COST OF FI…
In this paper we argue that risk-adjustment matters for the valuation of financial distress costs, since financial distress is more likely to happen in bad times. Systematic distress …

Aswath Damodaran Stern School of Business January 2006
The Cost of Distress: Survival, Truncation Risk and Valuation Traditional valuation techniques- both DCF and relative - short change the effects of financial distress on …

Capital Structure: the effect of Costs of Financial Distress, Age…
When choosing the capital structure, managers must balance the benefits of debt (taxes) against the costs of debt (financial distress). Firms should choose more Debt …

The determinants of financial distress cost: A case of emergin…
expected cost of FD in two steps: first, we measure the likelihood of financial distress (FDL), and then we calculate the expected loss of financial distress firms. In addition, we …