Using Options to Divide Value in Corporate Bankruptcy

Lucian Bebchuk ()

No 7614, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper revisits the proposal to use options in corporate bankruptcy that was put forward in Bebchuk (1988). According to the proposed procedure, corporate bankruptcy should be implemented through the distribution to participants of appropriately designed options. The paper starts by discussing the goals that should guide the design of bankruptcy procedures. The paper then explains how the options procedure can improve both ex post efficiency and ex ante efficiency. The paper offers a refined version of the procedure, and it also responds to questions that have been raised regarding the execution and desirability of the procedure. The paper concludes by explaining the relationship between the options approach to corporate bankruptcy and the Black-Scholes characterization of all corporate securities as options.

JEL-codes: G3 G33 (search for similar items in EconPapers)
Date: 2000-03
New Economics Papers: this item is included in nep-cfn, nep-fin and nep-fmk
Note: LE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (26)

Published as "Using Options to Divide Value in Corporate Bankruptcy" European Economic Review, Vol. 44, pp. 829-843 (2000).

Downloads: (external link)
http://www.nber.org/papers/w7614.pdf (application/pdf)

Related works:
Journal Article: Using options to divide value in corporate bankruptcy (2000)
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:nbr:nberwo:7614

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w7614

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().