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Leverage Decisions In The Presence Of Bankruptcy Laws

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  • Ahrendsen, Bruce L.
  • Collender, Robert N.

Abstract

Optimal leverage is modeled with and without the truncation of wealth provided by bankruptcy. Differences in optimal leverages and in farmers' responses to government programs are examined. Under plausible conditions some risk averse farmers demand infinite debt. Together farm programs and bankruptcy laws exacerbate agency problems in lending

Suggested Citation

  • Ahrendsen, Bruce L. & Collender, Robert N., 1989. "Leverage Decisions In The Presence Of Bankruptcy Laws," 1989 Annual Meeting, July 30-August 2, Baton Rouge, Louisiana 270695, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea89:270695
    DOI: 10.22004/ag.econ.270695
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    References listed on IDEAS

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    1. Michael Boehlje & Steven Griffin, 1979. "Financial Impacts of Government Support Price Programs," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 61(2), pages 285-296.
    2. Robison, Lindon J. & Barry, Peter J. & Burghardt, William G., 1987. "Borrowing Behavior Under Financial Stress By The Proprietary Firm: A Theoretical Analysis," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 12(2), pages 1-8, December.
    3. Peter J. Barry & C. B. Baker & Luis R. Sanint, 1981. "Farmers' Credit Risks and Liquidity Management," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 63(2), pages 216-227.
    4. Allen M. Featherstone & Charles B. Moss & Timothy G. Baker & Paul V. Preckel, 1988. "The Theoretical Effects of Farm Policies on Optimal Leverage and the Probability of Equity Losses," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 70(3), pages 572-579.
    5. Robert A. Collins, 1985. "Expected Utility, Debt-Equity Structure, and Risk Balancing," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 67(3), pages 627-629.
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    Cited by:

    1. Collins, Robert A. & Gbur, Edward E., 1991. "Borrowing Behavior Of The Proprietary Firm: Do Some Risk-Averse Expected Utility Maximizers Plunge?," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 16(2), pages 1-8, December.

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