Author : Hua Fan
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (129 download)
Book Synopsis Debt Valuation, Renegotiations and Optimal Dividend Policy by : Hua Fan
Download or read book Debt Valuation, Renegotiations and Optimal Dividend Policy written by Hua Fan and published by . This book was released on 2011 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: The valuation of debt and equity, reorganization boundaries and firm's optimal dividend policies are studied in a framework where we model strategic interactions between debtholders and equityholders in a game-theoretic setting which can accommodate varying bargaining powers to the two claimants. Two formulations of reorganization are presented: debt-equity swaps and strategic debt service resulting from negotiated debt service reductions. Bond covenants lead to more conservative dividend policies which benefit both claimants via lowered expected cost of liquidation. We derive optimal equity issuance and dividend policies. The debt capacity of the firm and the optimal capital structure are characterized.