Corporate Reorganizations and Non‐Cash Auctions

Matthew Rhodes‐Kropf and S Viswanathan
Authors registered in the RePEc Author Service: Matthew Rhodes-Kropf

Journal of Finance, 2000, vol. 55, issue 4, 1807-1849

Abstract: This paper extends the theory of non‐cash auctions by considering the revenue and efficiency of using different securities. Research on bankruptcy and privatization suggests using non‐cash auctions to increase cash‐constrained bidder participation. We examine this proposal and demonstrate that securities may lead to higher revenue. However, bidders pool unless bids include debt, which results in possible repossession by the seller. This suggests all‐equity outcomes are unlikely and explains the high debt of reorganized firms. Securities also inefficiently determine bidders' incentive contracts and the firm's capital structure. Therefore, we recommend a new cash auction for an incentive contract.

Date: 2000
References: Add references at CitEc
Citations: View citations in EconPapers (17)

Downloads: (external link)
https://doi.org/10.1111/0022-1082.00269

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:jfinan:v:55:y:2000:i:4:p:1807-1849

Ordering information: This journal article can be ordered from
http://www.afajof.org/membership/join.asp

Access Statistics for this article

More articles in Journal of Finance from American Finance Association Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().