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Preprint
English

Strategic Default, Debt Structure, and Stock Returns

Contributors

Valta, Philip

Number of pages

56

Publication date

2014

Abstract

This paper theoretically and empirically investigates how the debt structure and the strategic interaction between shareholders and debt holders in the event of default affect expected stock returns. The model predicts that expected stock returns are higher for firms that face high debt renegotiation difficulties and that have a large fraction of secured or convertible debt. Using a large sample of publicly traded US firms between 1985 and 2012, the paper presents new evidence on the link between debt structure and stock returns that is supportive of the model's predictions.

Keywords

  • Debt structure
  • Debt renegotiation
  • Stock returns

Note

Soumis dans : Journal of Financial and Quantitative Analysis

UNIGE affiliation entities

Citation (ISO format)

VALTA, Philip. Strategic Default, Debt Structure, and Stock Returns. 2014, p. 56. doi: 10.2139/ssrn.1101534

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Technical informations

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06/06/2015 10:37:00

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06/06/2015 10:37:00

Update

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