Transaction costs and capital structure choice: evidence from financially distressed firms
Article Abstract:
This study provides evidence that transactions costs discourage debt reductions by financially distressed firms when they restructure their debt out of court. As a result, these firms remain highly leveraged and one-in-three subsequently experience financial distress. Transactions costs are significantly smaller, hence leverage falls by more and there is less recurrence of financial distress, when firms recontract in Chapter 11. Chapter 11 therefore gives financially distressed firms more flexibility to choose optimal capital structures. (Reprinted by permission of the publisher.)
Publication Name: Journal of Finance
Subject: Business
ISSN: 0022-1082
Year: 1997
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Dealer Bid-Ask Quotes and Transaction Prices: An Empirical Study of Some Amex Options
Article Abstract:
The relationship between transaction prices and equilibrium prices for options is examined using data from the American Stock Exchange. The dealer's bid-ask quotes are influenced by his inventory. The inventory position also impacts the timing of a transaction. The validity of the dealers pricing model is confirmed. Transactional price variation is attributed to dealer attempts at optimization. The model is useful in evaluating dealer performance.
Publication Name: Journal of Finance
Subject: Business
ISSN: 0022-1082
Year: 1984
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Preferencing, Internalization, Best Execution, and Dealer Profits
Article Abstract:
The author examines the use of internalization and preferencing on stock markets. Topics include adverse effects, quality and profitability of services, and posting quotes.
Publication Name: Journal of Finance
Subject: Business
ISSN: 0022-1082
Year: 1999
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