Liquidation Values, Risk and Capital Structure

M.A. Rosellon Cifuentes

Research output: Working paperDiscussion paperOther research output

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Abstract

This paper investigate the interaction between financial structure, liquidation values and product market equilibrium. Liquidation values depend on how many firms are liquidated, and therefore on the industry equilibrium of capital structures and of technology choices. We show that firms using a technology with high liquidation value issue less debt than those with low liquidation bvalue even if these ones may be inefficiently liquidated. With respect to the equilibrium in the industry we obrtain that even if in equilibrium all firms use the same technology, firms will use widely different capital structures.
Original languageEnglish
Place of PublicationTilburg
PublisherFinance
Number of pages24
Volume1999-32
Publication statusPublished - 1999

Publication series

NameCentER Discussion Paper
Volume1999-32

Fingerprint

Liquidation
Capital structure
Industry
Financial structure
Debt
Product market
Market equilibrium
Technology choice
Industry equilibrium
Interaction

Keywords

  • capital
  • structure
  • technology choice
  • industry equilibrium
  • financial contracts

Cite this

Rosellon Cifuentes, M. A. (1999). Liquidation Values, Risk and Capital Structure. (CentER Discussion Paper; Vol. 1999-32). Tilburg: Finance.
Rosellon Cifuentes, M.A. / Liquidation Values, Risk and Capital Structure. Tilburg : Finance, 1999. (CentER Discussion Paper).
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Rosellon Cifuentes, MA 1999 'Liquidation Values, Risk and Capital Structure' CentER Discussion Paper, vol. 1999-32, Finance, Tilburg.

Liquidation Values, Risk and Capital Structure. / Rosellon Cifuentes, M.A.

Tilburg : Finance, 1999. (CentER Discussion Paper; Vol. 1999-32).

Research output: Working paperDiscussion paperOther research output

TY - UNPB

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N2 - This paper investigate the interaction between financial structure, liquidation values and product market equilibrium. Liquidation values depend on how many firms are liquidated, and therefore on the industry equilibrium of capital structures and of technology choices. We show that firms using a technology with high liquidation value issue less debt than those with low liquidation bvalue even if these ones may be inefficiently liquidated. With respect to the equilibrium in the industry we obrtain that even if in equilibrium all firms use the same technology, firms will use widely different capital structures.

AB - This paper investigate the interaction between financial structure, liquidation values and product market equilibrium. Liquidation values depend on how many firms are liquidated, and therefore on the industry equilibrium of capital structures and of technology choices. We show that firms using a technology with high liquidation value issue less debt than those with low liquidation bvalue even if these ones may be inefficiently liquidated. With respect to the equilibrium in the industry we obrtain that even if in equilibrium all firms use the same technology, firms will use widely different capital structures.

KW - capital

KW - structure

KW - technology choice

KW - industry equilibrium

KW - financial contracts

M3 - Discussion paper

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PB - Finance

CY - Tilburg

ER -

Rosellon Cifuentes MA. Liquidation Values, Risk and Capital Structure. Tilburg: Finance. 1999. (CentER Discussion Paper).