It Takes Two To Tango: an empirical tale of distressed firms and assisting banks
We study the restructuring process of small and medium-sized firms in financial distress. We have a unique dataset with firms in the Netherlands that are guided in their restructuring effort by banks. Part of our dataset consists of firms that successfully restructure their operations and obligations with the help of their bank. Another part consists of firms that, despite the assistance of their bank, did not succeed in reorganizing their operations and finances. Our empirical test predicts success and failure in restructuring. We find that banks guide firms in their restructuring effort and that their assistance is of crucial importance to the success of the restructuring. However, some firms do not benefit from this assistance, because firms need to be prepared to undertake radical operational changes before bank assistance is forthcoming.
|Date of creation:||06 Aug 2004|
|Contact details of provider:|| Postal: RSM Erasmus University & Erasmus School of Economics, PoBox 1738, 3000 DR Rotterdam|
Phone: 31-10-408 1182
Fax: 31-10-408 9020
Web page: http://www.erim.eur.nl/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Welch, Ivo, 1997. "Why Is Bank Debt Senior? A Theory of Asymmetry and Claim Priority Based on Influence Costs," Review of Financial Studies, Society for Financial Studies, vol. 10(4), pages 1203-1236.
- Oliver Hart & John Moore, 1998. "Default and Renegotiation: A Dynamic Model of Debt," The Quarterly Journal of Economics, Oxford University Press, vol. 113(1), pages 1-41.
- Gorton, G. & Khan, J., 1992.
"The Design of Bank Loan Contracts, Collateral, and Renegociation,"
RCER Working Papers
327, University of Rochester - Center for Economic Research (RCER).
- Gary Gorton & James A. Kahn, 1993. "The Design of Bank Loan Contracts, Collateral, and Renegotiation," NBER Working Papers 4273, National Bureau of Economic Research, Inc.
- Haubrich, Joseph G., 1989. "Financial intermediation : Delegated monitoring and long-term relationships," Journal of Banking & Finance, Elsevier, vol. 13(1), pages 9-20, March.
- J.G. Haubrich, "undated". "Financial Intermediation: Delegated Monitoring and Long-Term Relationships," Rodney L. White Center for Financial Research Working Papers 09-86, Wharton School Rodney L. White Center for Financial Research.
- J. G. Haubrich, "undated". "Financial Intermediation: Delegated Monitoring and Long-Term Relationships," Rodney L. White Center for Financial Research Working Papers 9-86, Wharton School Rodney L. White Center for Financial Research.
- Bigus, Jochen, 2002. "Bankruptcy law, asset substitution problem, and creditor conflicts," International Review of Law and Economics, Elsevier, vol. 22(2), pages 109-132, August.
- Bolton, Patrick & Scharfstein, David S, 1996. "Optimal Debt Structure and the Number of Creditors," Journal of Political Economy, University of Chicago Press, vol. 104(1), pages 1-25, February.
- Couwenberg, Oscar, 2001. "Survival rates in bankruptcy systems : overlooking the evidence," Research Report 01E15, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
- Kevin M.J. Kaiser, 1996. "European Bankruptcy Laws: Implications for Corporations Facing Financial Distress," Financial Management, Financial Management Association, vol. 25(3), Fall.
- Paul Asquith & Robert Gertner & David Scharfstein, 1994. "Anatomy of Financial Distress: An Examination of Junk-Bond Issuers," The Quarterly Journal of Economics, Oxford University Press, vol. 109(3), pages 625-658.
- Michelle J. White, 1980. "Public Policy Toward Bankruptcy: Me-First and Other Priority Rules," Bell Journal of Economics, The RAND Corporation, vol. 11(2), pages 550-564, Autumn.
- Erik Berglöf & Ernst-Ludwig von Thadden, 1994. "Short-Term versus Long-Term Interests: Capital Structure with Multiple Investors," The Quarterly Journal of Economics, Oxford University Press, vol. 109(4), pages 1055-1084.
- Eisenberg, Theodore & Tagashira, Shoichi, 1994. "Should We Abolish Chapter 11? The Evidence from Japan," The Journal of Legal Studies, University of Chicago Press, vol. 23(1), pages 111-157, January.
- James, Christopher, 1995. "When Do Banks Take Equity in Debt Restructurings?," Review of Financial Studies, Society for Financial Studies, vol. 8(4), pages 1209-1234.
- repec:dgr:rugsom:01e15 is not listed on IDEAS
- Gilson, Stuart C. & John, Kose & Lang, Larry H. P., 1990. "Troubled debt restructurings*1: An empirical study of private reorganization of firms in default," Journal of Financial Economics, Elsevier, vol. 27(2), pages 315-353, October. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:ems:eureri:1444. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (RePub)
If references are entirely missing, you can add them using this form.