The Administrative Costs of Debt Restructurings: Some Recent Evidence

Brian L. Betker

Financial Management, 1997, vol. 26, issue 4

Abstract: How much does it cost to restructure a firm's debt? What factors can explain differences in restructuring costs across firms? The central thesis of the paper is that restructuring costs should be lower when there is less competition among creditors. Understanding the size and determinants of direct financial distress costs is important for two reasons. Under the "static trade-off" theories of capital structure, financial distress costs can be an important determinant of firms' optimal capital structures. Documenting the nature of financial distress costs is essential to understanding and testing these theories. Also, the debt restructuring process has been criticized for becoming increasingly inefficient and costly. Understanding the determinants of restructuring costs is necessary before policymakers can discuss ways to reduce these costs.

Date: 1997
References: Add references at CitEc
Citations: View citations in EconPapers (21)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

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:fma:fmanag:betker97

Access Statistics for this article

Financial Management is currently edited by Bill Christie

More articles in Financial Management from Financial Management Association University of South Florida 4202 E. Fowler Ave. COBA #3331 Tampa, FL 33620. Contact information at EDIRC.
Bibliographic data for series maintained by Courtney Connors ( this e-mail address is bad, please contact ).