Journal ArticleDOI
Access to Collateral and Corporate Debt Structure: Evidence from a Natural Experiment
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In this article, the authors investigate how firms respond to strengthening of creditor rights by examining their financial decisions following a securitization reform in India and find that the reform led to a reduction in secured debt, total debt, debt maturity, and asset growth.Abstract:
We investigate how firms respond to strengthening of creditor rights by examining their financial decisions following a securitization reform in India. We find that the reform led to a reduction in secured debt, total debt, debt maturity, and asset growth, and an increase in liquidity hoarding by firms. Moreover, the effects are more pronounced for firms that have a higher proportion of tangible assets because these firms are more affected by the secured transactions law. These results suggest that strengthening of creditor rights introduces a liquidation bias and documents how firms alter their debt structures to contract around it.read more
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Creditor rights, information sharing, and bank risk taking
TL;DR: This paper found that stronger creditor rights tend to promote greater bank risk-taking and increase the likelihood of financial crisis, while the benefits of information sharing among creditors appear to be universally positive.
Journal ArticleDOI
Bankruptcy law and bank financing
TL;DR: In this paper, the authors disentangle the effects of reorganization and liquidation in bankruptcy on bank financing and firm investment, and highlight the importance of identifying the distinct effects of liquidation and reorganization, as these procedures differently address the tension between the continuation of viable businesses and the preservation of repayment incentives.
Journal ArticleDOI
Court Enforcement, Bank Loans, and Firm Investment: Evidence from a Bankruptcy Reform in Brazil
TL;DR: In this article, the authors exploit variation in the congestion of civil courts across Brazilian municipalities, together with a bankruptcy reform increasing secured creditors protection, to estimate the effect of enforcement on firm access to finance, investment and size.
Journal ArticleDOI
Creditor rights and innovation: Evidence from patent collateral
TL;DR: In this paper, the authors show that patents are pledged as collateral to raise significant debt financing, and that the pledgeability of patents contributes to the financing of innovation, and they show that patenting companies raised more debt, and spent more on R&D, when creditor rights to patents strengthened.
Journal ArticleDOI
Institutional and Legal Context in Natural Experiments: The Case of State Antitakeover Laws
TL;DR: In this article, the authors argue empirically that a firm's institutional and legal context has first-order effects in tests that use state antitakeover laws for identification, and they show that the inferences from nine prior studies related to nine different outcome variables change substantially when they include controls for these considerations.
References
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Journal ArticleDOI
Theory of the firm: Managerial behavior, agency costs and ownership structure
TL;DR: In this article, the authors draw on recent progress in the theory of property rights, agency, and finance to develop a theory of ownership structure for the firm, which casts new light on and has implications for a variety of issues in the professional and popular literature.
Journal Article
The Cost of Capital, Corporation Finance and the Theory of Investment
TL;DR: In this article, the effect of financial structure on market valuations has been investigated and a theory of investment of the firm under conditions of uncertainty has been developed for the cost-of-capital problem.
Posted Content
Law and Finance
Rafael La Porta,Rafael La Porta,Florencio Lopez de Silanes,Florencio Lopez de Silanes,Andrei Shleifer,Andrei Shleifer,Robert W. Vishny,Robert W. Vishny +7 more
TL;DR: This paper examined legal rules covering protection of corporate shareholders and creditors, the origin of these rules, and the quality of their enforcement in 49 countries and found that common law countries generally have the best, and French civil law countries the worst, legal protections of investors.
Posted Content
Agency Costs of Free Cash Flow, Corporate Finance, and Takeovers
TL;DR: In this paper, the benefits of debt in reducing agency costs of free cash flows, how debt can substitute for dividends, why diversification programs are more likely to generate losses than takeovers or expansion in the same line of business or liquidationmotivated takeovers, and why the factors generating takeover activity in such diverse activities as broadcasting and tobacco are similar to those in oil.
Journal ArticleDOI
Law and Finance
TL;DR: In this article, the authors examined legal rules covering protection of corporate shareholders and creditors, the origin of these rules, and the quality of their enforcement in 49 countries and found that common-law countries generally have the strongest, and French civil law countries the weakest, legal protections of investors, with German- and Scandinavian-civil law countries located in the middle.