Conglomeration with bankruptcy costs: Separate or joint financing?
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- dc.contributor.author Banal Estañol, Albertca
- dc.contributor.author Ottaviani, Marcoca
- dc.contributor.other Universitat Pompeu Fabra. Departament d'Economia i Empresa
- dc.date.accessioned 2017-07-26T10:50:04Z
- dc.date.available 2017-07-26T10:50:04Z
- dc.date.issued 2009-02-01
- dc.date.modified 2017-07-23T02:12:56Z
- dc.description.abstract The paper analyzes the determinants of the optimal scope of incorporation in the presence of bankruptcy costs. Bankruptcy costs alone generate a non-trivial tradeoff between the benefit of coinsurance and the cost of risk contamination associated to joint financing corporate projects through debt. This tradeoff is characterized for projects with binary returns, depending on the distributional characteristics of returns (mean, variability, skewness, heterogeneity, correlation, and number of projects), the bankruptcy recovery rate, and the tax rate advantage of debt relative to equity. Our testable predictions are broadly consistent with existing empirical evidence on conglomerate mergers, spin-offs, project finance, and securitization.
- dc.format.mimetype application/pdfca
- dc.identifier https://econ-papers.upf.edu/ca/paper.php?id=1191
- dc.identifier.uri http://hdl.handle.net/10230/6071
- dc.language.iso eng
- dc.relation.ispartofseries Economics and Business Working Papers Series; 1191
- dc.rights L'accés als continguts d'aquest document queda condicionat a l'acceptació de les condicions d'ús establertes per la següent llicència Creative Commons
- dc.rights.accessRights info:eu-repo/semantics/openAccess
- dc.rights.uri http://creativecommons.org/licenses/by-nc-nd/3.0/es/
- dc.subject.keyword bankruptcy
- dc.subject.keyword conglomeration
- dc.subject.keyword mergers
- dc.subject.keyword spin-offs
- dc.subject.keyword project finance
- dc.subject.keyword Business Economics and Industrial Organization
- dc.subject.keyword Finance and Accounting
- dc.subject.keyword Operations Management
- dc.title Conglomeration with bankruptcy costs: Separate or joint financing?ca
- dc.type info:eu-repo/semantics/workingPaper