The role of warrants in corporate reorganizations

Stanley D. Longhofer

No 9512, Working Papers (Old Series) from Federal Reserve Bank of Cleveland

Abstract: An argument that informational asymmetries explain why the original shareholders of some firms emerge from Chapter 11 bankruptcy proceedings with stock in the reorganized company, while others receive warrants. By proposing a reorganization plan in which they receive warrants, the original stockholders of a firm with good future prospects can signal their superior information to the creditors in a way that firms with poor prospects will not wish to mimic.

Keywords: Bankruptcy; options; Stocks (search for similar items in EconPapers)
Date: 1995
References: Add references at CitEc
Citations:

Downloads: (external link)
https://fraser.stlouisfed.org/scribd/?item_id=4946 ... 5-12.pdf#scribd-open Full text (application/pdf)

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:fip:fedcwp:9512

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in Working Papers (Old Series) from Federal Reserve Bank of Cleveland Contact information at EDIRC.
Bibliographic data for series maintained by 4D Library ().