| 来源类型 | Discussion paper |
| 规范类型 | 论文 |
| 来源ID | DP15238 |
| DP15238 Doubling Down on Debt: Limited Liability as a Financial Friction | |
| Jesse Perla; Carolin Pflueger; Michal Szkup | |
| 发表日期 | 2020-08-31 |
| 出版年 | 2020 |
| 语种 | 英语 |
| 摘要 | We investigate how a combination of limited liability and preexisting debt distort firms’ investment and equity payout decisions. We show that equity holders have incentives to ``double-sell'' cash flows in default, leading to overinvestment, provided that the firm has preexisting debt and the ability to issue new claims to the bankruptcy value of the firm. In a repeated version of the model, we show that the inability to commit to not double-sell cash flows leads to heterogeneous investment distortions, where high leverage firms tend to overinvest but low leverage firms tend to underinvest. Permitting equity payouts financed by new debt mitigates overinvestment for high leverage firms, but raises bankruptcy rates and exacerbates low leverage firms' tendency to underinvest---as the anticipation of equity payouts from future debt raises their cost of debt issuance. Finally, we provide empirical evidence consistent with the model. |
| 主题 | Financial Economics ; Macroeconomics and Growth ; Monetary Economics and Fluctuations |
| 关键词 | Leverage Debt overhang Overinvestment Underinvestment Equity payout restrictions |
| URL | https://cepr.org/publications/dp15238 |
| 来源智库 | Centre for Economic Policy Research (United Kingdom) |
| 资源类型 | 智库出版物 |
| 条目标识符 | http://119.78.100.153/handle/2XGU8XDN/544213 |
| 推荐引用方式 GB/T 7714 | Jesse Perla,Carolin Pflueger,Michal Szkup. DP15238 Doubling Down on Debt: Limited Liability as a Financial Friction. 2020. |
| 条目包含的文件 | 条目无相关文件。 | |||||
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