In this paper, I examine the strategic role of debt structure in improving the bargaining position of a firm’s management relative to its non-financial stakeholders. Debt structure is essential for strategic bargaining because it affects the ease of renegotiating debt contracts and thus the credibility of bankruptcy threats.
Using a regression discontinuity design, I show that debt structure is adjusted toward debt that is more difficult to renegotiate in response to an increase in employees’ negotiation power. Further analyses confirm that the debt structure adjustments are more likely driven by the strategic concerns of management, rather than by other explanations.
In this article, I discuss the possibilities and limitations of restructuring laws against the background of geopolitical shocks such as the Covid-19...
In this paper, we study how legal uncertainty affects economic activity. We develop a parsimonious model with different types of legal uncertainty that...
This essay sheds new light on the importance of credit creation infrastructure in determining who actually receives government support during periods...