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http://hdl.handle.net/2451/28301
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| Title: | Efficient Recapitalization |
| Authors: | Philippon, Thomas
Schnabl, Philipp |
| Issue Date: | 18-Sep-2009 |
| Series/Report no.: | FIN-09-014 |
| Abstract: | We analyze public interventions to alleviate debt overhang among private
rms when the government has limited information and limited resources.
We compare the e¢ ciency of buying equity, purchasing existing
assets, and providing debt guarantees. With sym- metric information, all
the interventions are equivalent. With asymmetric information between
rms and the government, buying equity dominates the two other interven-
tions. We solve for the optimal intervention, and show how it can be
implemented with subordinated loans and warrants. |
| URI: | http://hdl.handle.net/2451/28301 |
| Appears in Collections: | Finance Working Papers
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