Strategic defaults and priority violations under costly state verification

dc.contributor.author	Hvide, Hans K.
dc.contributor.author	Leite, Tore
dc.date.accessioned	2006-07-13T10:38:40Z
dc.date.available	2006-07-13T10:38:40Z
dc.date.issued	2002-06
dc.identifier.issn	1500-4066
dc.identifier.uri	http://hdl.handle.net/11250/163701
dc.description.abstract	We reformulate the classic CSV model of financial contracting from Townsend (1979) and Gale & Hellwig (1985) to tackle criticisms raised against it, such as lack of subgame-perfectness at the repayment stage and its inability to encompass equity contracts. The implications drawn are shown to be consistent with empirical regularities, such as strategic defaults of debt obligations, firms being financed by a mix of debt and equity, violations of absolute priority rules, and a low debt ratio for high risk projects.	en
dc.format.extent	380483 bytes
dc.format.mimetype	application/pdf
dc.language.iso	eng	en
dc.publisher	Norwegian School of Economics and Business Administration. Department of Finance and Management Science	en
dc.relation.ispartofseries	Discussion paper	en
dc.relation.ispartofseries	2002:7	en
dc.subject	capital structure	en
dc.subject	cash diversion	en
dc.subject	costly state verification	en
dc.subject	debt	en
dc.subject	outside equity	en
dc.subject	priority violations	en
dc.subject	financial contracts	en
dc.subject	strategic default	en
dc.title	Strategic defaults and priority violations under costly state verification	en
dc.type	Working paper	en