Year: 1992
Type: article
Abstract: ABSTRACT We explore the determinants of liquidation values of assets, particularly focusing on the potential buyers of assets. When a firm in financial distress needs to sell assets, its industry peers are likely to be experiencing problems themselves, leading to asset sales at prices below value in best use. Such illiquidity makes assets cheap in bad times, and so ex ante is a significant private cost of leverage. We use this focus on asset buyers to explain variation in debt capacity across industries and over the business cycle, as well as the rise in U.S. corporate leverage in the 1980s.
Source: The Journal of Finance
Authors: ANDREI SHLEIFER, ROBERT W. VISHNY
Institutions: Harvard University, University of Chicago
Language: English
Subfield: Law
Field: Social Sciences
Domain: Social Sciences
Open Access status: bronze
OpenAlex ID: W2019222975