| 000 | 01599cam a2200241 4500500 | ||
|---|---|---|---|
| 005 | 20250121072437.0 | ||
| 041 | _afre | ||
| 042 | _adc | ||
| 100 | 1 | 0 |
_aAttaoui, Sami _eauthor |
| 700 | 1 | 0 |
_a Bennouri, Moez _eauthor |
| 700 | 1 | 0 |
_a Mejri, Imen _eauthor |
| 245 | 0 | 0 | _aPerformance-sensitive debt: A new mechanism |
| 260 | _c2018. | ||
| 500 | _a1 | ||
| 520 | _aWe propose a new mechanism of finite-maturity performance-sensitive debt (PSD). Unlike typical PSD, our mechanism relates positively the firm’s performance, captured by the level of its assets, to the coupon rate. That is, when its performance improves, the firm pays a high coupon rate, and when its performance deteriorates, the firm pays a low coupon rate. In a fairly general setting, we provide the necessary and sufficient conditions for our PSD to be efficient, and show that this mechanism can be immune against risk-shifting when augmented with a covenant deterring managers from changing risk following debt issuance. We analyze the characteristics of an example of such a mechanism where the coupon rate is a stepwise function of assets, and find that intermediate credit quality firms benefit most from it. This suggests that this new PSD should be considered as a complement to typical ones. | ||
| 690 | _atradeoff | ||
| 690 | _aliquidation | ||
| 690 | _aefficiency | ||
| 690 | _aperformance-sensitive debt | ||
| 690 | _aasset substitution | ||
| 786 | 0 | _nFinance | 38 | 2 | 2018-04-09 | p. 39-93 | 0752-6180 | |
| 856 | 4 | 1 | _uhttps://shs.cairn.info/journal-finance-2017-2-page-39?lang=en&redirect-ssocas=7080 |
| 999 |
_c486602 _d486602 |
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