Liquidation under moral hazard: Optimal debt maturity and loan commitments |
| |
| Institution: | 1. Tianjin University of Finance and Economics, China;2. Trinity Business School, Trinity College Dublin, Dublin 2, Ireland;3. University of Sydney Business School, University of Sydney, Sydney, New South Wales, Australia;4. Distinguished Research Fellow, Institute of Business Research, University of Economics Ho Chi Minh City, 59C Nguyen Dinh Chieu, Ward 6, District 3, Ho Chi Minh City, Vietnam;5. Institute for Industrial Economics, Jiangxi University of Economics and Finance, 169, East Shuanggang Road, Xialuo, Changbei District 330013 Nanchang, Jiangxi, China |
| |
| Abstract: | This paper examines the benefits and limitations of loan commitment financing. Commitments enable firms to adopt more efficient liquidation policies. We demonstrate, however, that the limitations of commitment financing depend on a number of firm characteristics. In some circumstances, firms find long-term debt to be a superior alternative to commitment financing. This provides a possible explanation for why loan commitments are not universally utilized. By considering both the benefits as well as the limitations of loan commitment financing, we are also able to integrate loan commitment contracts into a model of optimal debt maturity. |
| |
| Keywords: | |
| 本文献已被 ScienceDirect 等数据库收录！ |
|
