Stabsseminar ved Espen Eckbo

Prof. B. Espen Eckbo, Dartmouth College/NHH, holder stabsseminar ved Institutt for foretaksøkonomi fredag 16. mars.

15.03.2001 - Elin F. Styve

Tema er: Toeholds and Fire-Sales in Bankruptcy Auctions

Tid og sted:
Fredag 16. mars kl. 1215-1330 i Karl Borchs aud.

Abstract
An impaired debt claim is similar to an equity ownership position or a 'creditor toehold' in the distressed firm. When the firm goes bankrupt and is sold in an open, ascending auction with two bidders, the toehold induces the creditor to finance the lowest- valuation bidder and to push for overbidding. Examining mandatory bankruptcy auctions in Sweden, we find strong toehold effects: The greater the toehold the lower the probability that the old bank finances the winning bidder, and the higher the winning going-concern premium, both as predicted. Controlling for toehold effects, there is no evidence that the going-concern premium is lower in business cycle downturns, in relatively distressed industries, or when sold to industry outsiders. Thus, there is no support for asset fire-sale arguments, possibly because bidding with creditor toehold helps counteract fire-sale tendencies in relatively illiquid auctions.

Paper kan hentes fra instituttets hjemmeside på Internett:
www.nhh.no/for/seminars/2001-spring/160301.pdf.

Kontaktperson: Hans K. Hvide (9283)