Towards a theory of the credit-risk balance sheet

This article designs what it calls a Credit-Risk Balance Sheet (the risk being that of default by customers), a tool which, in principle, can contribute to revealing, controlling and managing the bad debt risk arising from a company¿s commercial credit, whose amount can represent a significant proportion of both its current and total assets.To construct it, we start from the duality observed in any credit transaction of this nature, whose basic identity can be summed up as Credit = Risk. ¿Credit¿ is granted by a company to its customer, and can be ranked by quality (we suggest the credit scoring system) and ¿risk¿ can either be assumed (interiorised) by the company itself or transferred to third parties (exteriorised).What provides the approach that leads to us being able to talk with confidence of a real Credit-Risk Balance Sheet with its methodological robustness is that the dual vision of the credit transaction is not, as we demonstrate, merely a classificatory duality (a double risk-credit classification of reality) but rather a true causal relationship, that is, a risk-credit causal duality.Once said Credit-Risk Balance Sheet (which bears a certain structural similarity with the classic net asset balance sheet) has been built, and its methodological coherence demonstrated, its properties ¿static and dynamic¿ are studied.Analysis of the temporal evolution of the Credit-Risk Balance Sheet and of its applications will be the object of subsequent works.

Towards a theory of the credit-risk balance sheet

This article designs what it calls a Credit-Risk Balance Sheet (the risk being that of default by customers), a tool which, in principle, can contribute to revealing, controlling and managing the bad debt risk arising from a company¿s commercial credit, whose amount can represent a significant proportion of both its current and total assets.To construct it, we start from the duality observed in any credit transaction of this nature, whose basic identity can be summed up as Credit = Risk. ¿Credit¿ is granted by a company to its customer, and can be ranked by quality (we suggest the credit scoring system) and ¿risk¿ can either be assumed (interiorised) by the company itself or transferred to third parties (exteriorised).What provides the approach that leads to us being able to talk with confidence of a real Credit-Risk Balance Sheet with its methodological robustness is that the dual vision of the credit transaction is not, as we demonstrate, merely a classificatory duality (a double risk-credit classification of reality) but rather a true causal relationship, that is, a risk-credit causal duality.Once said Credit-Risk Balance Sheet (which bears a certain structural similarity with the classic net asset balance sheet) has been built, and its methodological coherence demonstrated, its properties ¿static and dynamic¿ are studied.Analysis of the temporal evolution of the Credit-Risk Balance Sheet and of its applications will be the object of subsequent works.

Un modelo de riesgo de crédito basado en opciones compuestas con barrera. Aplicación al mercado continuo español

In this work the valuation methodology of compound option written on a downand-out call option, developed by Ericsson and Reneby (2003), has been applied to deduce a credit risk model. It is supposed that the firm has a debt structure with two maturity dates and that the credit event takes place when the assets firm value falls under a determined level called barrier. An empirical application of the model for 105 firms of Spanish continuous market is carried out. For each one of them its value in the date of analysis, the volatility and the critical value are obtained and from these, the default probability to short and long-term and the implicit probability in the two previous probabilities are deduced. The results are compared with the ones obtained from the Geskemodel (1977).

Viabilidad del sistema de pensiones y reformas por el lado de los ingresos: una aproximación intergeneracional

Este artículo, mediante el método de la Contabilidad Generacional, examina la viabilidad a largo plazo y los efectos sobre la redistribución intergeneracional de la renta del sistema de pensiones español. Dado la enorme deuda acumulada, que se traslada a las generaciones futuras, se explora la posibilidad de introducir políticas de reforma por el lado de los ingresos que pretenden mitigar la fuerte dependencia demográfica de las finanzas de la Seguridad Social. El principal resultado obtenido es que la gravedad de la crisis demográfica hace que estos tipos de medidas estudiadas sean claramente insuficientes para restaurar el equilibrio intergeneracional.

2011 Road Use Tax Fund (RUTF) Study A report to the Iowa Legislature, per 2011 Iowa Code Section 307.31

The transportation system is in demand 24/7 and 365 days a year irrespective of neither the weather nor the conditions. Iowa’s transportation system is an integral and essential part of society serving commerce and daily functions of all Iowans across the state. A high quality transportation system serves as the artery for economic activity and, the condition of the infrastructure is a key element for our future growth opportunities. A key component of Iowa’s transportation system is the public roadway system owned and maintained by the state, cities and counties. In order to regularly re-evaluate the conditions of Iowa’s public roadway infrastructure and assess the ability of existing revenues to meet the needs of the system, the Iowa Department of Transportation’s 2006 Road Use Tax Fund (RUTF) report to the legislature included a recommendation that a study be conducted every five years. That recommendation was included in legislation adopted in 2007 and signed into law. The law specifically requires the following (2011 Iowa Code Section 307.31): •“The department shall periodically review the current revenue levels of the road use tax fund and the sufficiency of those revenues for the projected construction and maintenance needs of city, county, and state governments in the future. The department shall submit a written report to the general assembly regarding its findings by December 31 every five years, beginning in 2011. The report may include recommendations concerning funding levels needed to support the future mobility and accessibility for users of Iowa's public road system.” •“The department shall evaluate alternative funding sources for road maintenance and construction and report to the general assembly at least every five years on the advantages and disadvantages and the viability of alternative funding mechanisms.” Consistent with this requirement, the Iowa Department of Transportation (DOT) has prepared this study. Recognizing the importance of actively engaging with the public and transportation stakeholders in any discussion of public roadway conditions and needs, Governor Terry E. Branstad announced on March 8, 2011, the creation of, and appointments to, the Governor’s Transportation 2020 Citizen Advisory Commission (CAC). The CAC was tasked with assisting the Iowa DOT as they assess the condition of Iowa’s roadway system and evaluate current and future funding available to best address system needs. In particular the CAC was directed to gather input from the public and stakeholders regarding the condition of Iowa’s public roadway system, the impact of that system, whether additional funding is needed to maintain/improve the system, and, if so, what funding mechanisms ought to be considered. With this input, the CAC prepared a report and recommendations that were presented to Governor Branstad and the Iowa DOT in November 2011 for use in the development of this study. The CAC’s report is available at www.iowadot.gov/transportation2020/pdfs/CAC%20REPORT%20FINAL%20110211.pdf. The CAC’s report was developed utilizing analysis and information from the Iowa DOT. Therefore, the report forms the basis for this study and the two documents are very similar. Iowa is fortunate to have an extensive public roadway system that provides access to all areas of the state and facilitates the efficient movement of goods and people. However, it is also a tremendous challenge for the state, cities and counties to maintain and improve this system given flattening revenue, lost buying power, changing demands on the system, severe weather, and an aging system. This challenge didn’t appear overnight and for the last decade many studies have been completed to look into the situation and the legislature has taken significant action to begin addressing the situation. In addition, the Iowa DOT and Iowa’s cities and counties have worked jointly and independently to increase efficiency and streamline operations. All of these actions have been successful and resulted in significant changes; however, it is apparent much more needs to be done. A well-maintained, high-quality transportation system reduces transportation costs and provides consistent and reliable service. These are all factors that are critical in the evaluation companies undertake when deciding where to expand or locate new developments. The CAC and Iowa DOT heard from many Iowans that additional investment in Iowa’s roadway system is vital to support existing jobs and continued job creation in the state of Iowa. Beginning June 2011, the CAC met regularly to review material and discuss potential recommendations to address Iowa’s roadway funding challenges. This effort included extensive public outreach with meetings held in seven locations across Iowa and through a Transportation 2020 website hosted by the Iowa DOT (www.iowadot.gov/transportation2020). Over 500 people attended the public meetings held through the months of August and September, with 198 providing verbal or written comment at the meetings or through the website. Comments were received from a wide array of individuals. The public comments demonstrated overwhelming support for increased funding for Iowa’s roads. Through the public input process, several guiding principles were established to guide the development of recommendations. Those guiding principles are: • Additional revenues are restricted for road and bridge improvements only, like 95 percent of the current state road revenue is currently. This includes the fuel tax and registration fees. • State and local governments continue to streamline and become more efficient, both individually and by looking for ways to do things collectively. • User fee concept is preserved, where those who use the roads pay for them, including non¬residents. • Revenue-generating methods equitable across users. • Increase revenue generating mechanisms that are viable now but begin to implement and set the stage for longer-term solutions that bring equity and stability to road funding. • Continue Iowa’s long standing tradition of state roadway financing coming from pay-as-you-go financing. Iowa must not fall into the situation that other states are currently facing where the majority of their new program dollars are utilized to pay the debt service of past bonding. Based on the analysis of Iowa’s public roadway needs and revenue and the extensive work of the Governor’s Transportation 2020 Citizen Advisory Commission, the Iowa DOT has identified specific recommendations. The recommendations follow very closely the recommendations of the CAC (CAC recommendations from their report are repeated in Appendix B). Following is a summary of the recommendations which are fully documented beginning on page 21. 1. Through a combination of efficiency savings and increased revenue, a minimum of $215 million of revenue per year should be generated to meet Iowa’s critical roadway needs. 2. The Code of Iowa should be changed to require the study of the sufficiency of the state’s road funds to meet the road system’s needs every two years instead of every five years to coincide with the biennial legislative budget appropriation schedule. 3.Modify the current registration fee for electric vehicles to be based on weight and value using the same formula that applies to most passenger vehicles. 4.Consistent with existing Code of Iowa requirements, new funding should go to the TIME-21 Fund up to the cap ($225 million) and remaining new funding should be distributed consistent with the Road Use Tax Fund distribution formula. 5.The CAC recommended the Iowa DOT at least annually convene meetings with cities and counties to review the operation, maintenance and improvement of Iowa’s public roadway system to identify ways to jointly increase efficiency. In direct response to this recommendation, Governor Branstad directed the Iowa DOT to begin this effort immediately with a target of identifying $50 million of efficiency savings that can be captured from the over $1 billion of state revenue already provided to the Iowa DOT and Iowa’s cities and counties to administer, maintain and improve Iowa’s public roadway system. This would build upon past joint and individual actions that have reduced administrative costs and resulted in increased funding for improvement of Iowa’s public roadway system. Efficiency actions should be quantified, measured and reported to the public on a regular basis. 6.By June 30, 2012, Iowa DOT should complete a study of vehicles and equipment that use Iowa’s public roadway system but pay no user fees or substantially lower user fees than other vehicles and equipment.

The experience of transplantation for patients and their significant ones: A difficult encounter of two worlds

Objectives This paper reports on a longitudinal qualitative study exploring concerns of 60 patients before and after transplantation. Methods Semi-structured interviews were conducted without time constraints in a protected space out of the hospital. Qualitative analysis was performed. Results Prior to transplantation, all patients talked freely about negative feelings, stigmatisation, being misunderstood by others, loneliness and culpability caused by increasing physical dependency or abandoned roles. They mentioned alternative ways to cope (magic, spirituality), and even expressed their right to let go. In a subset of 13 patients, significant ones allowed themselves in the interview, or were integrated on the request of the patients. In this modified setting, two illness-worlds were confronted. If common themes were mentioned (e.g., modified life plans, restricted space, physical and psychological barriers), they were experienced differently. Fear of transplantation or guilt towards the donors was overtly expressed, often for the first time. Mutual hiding of anxiety in order to protect loved ones or to prevent loss of control was disclosed. The significant ones talked about accumulated stress and exhaustion related to the physical degradation of the patient, fear of the unpredictable evolution of illness and financial problems, and stressed their difficulty to adapt adequately to the fluctuating state of the patient. After transplantation, other themes emerged, where difficulty in disclosure was observed: intensive care and near death experiences, being a transplanted person, debt to the donor and his/her family, fear of rejection. Conclusions With the self-imposed strategy of hiding concerns to protect one another, a discrepancy between two illness-worlds was created. When concerns were confronted during the interviews, a new mutual understanding emerged. Patients and their families stated the need for sharing concerns in the course of illness.

Mourning becomes Electra d'Eugene O'Neill: Èsquil i Plató per a crear un drama fosc?

The fundamental debt of E. O'Neill's Mourning Becomes Electra to Aeschylus, and to a lesser degree to Sophocles and Euripides, has been always recognised but, according to the author's hypothesis, O'Neill might have taken advantage of the Platonic image of the cave in order to magnify his both Greek and American drama. It is certainly a risky hypothesis that stricto sensu cannot be proved, but it is also reader's right to evaluate the plausibility and the possible dramatic benefit derived from such a reading. Besides indicating to what degree some of the essential themes of Platonic philosophy concerning darkness, light or the flight from the prison of the material world are not extraneous to O'Neill's work, the author proves he was aware of the Platonic image of the cave thanks to its capital importance in the work of some of his intellectual mentors such as F. Nietzsche or Oscar Wilde. Nevertheless, the most significant aim of the author's article is to emphasize both the dramatic benefits and the logical reflections derived, as said before, from reading little by little O'Neill's drama bearing in mind the above mentioned Platonic parameter.

Mourning becomes Electra de Eugene O'Neill: ¿Esquilo y la caverna de Platón para crear un drama oscuro?

The fundamental debt of E. O'Neill's Mourning Becomes Electra to Aeschylus, and to a lesser degree to Sophocles and Euripides, has been always recognised but, according to the author's hypothesis, O'Neill might have taken advantage of the Platonic image of the cave in order to magnify his both Greek and American drama. It is certainly a risky hypothesis that stricto sensu cannot be proved, but it is also reader's right to evaluate the plausibility and the possible dramatic benefit derived from such a reading. Besides indicating to what degree some of the essential themes of Platonic philosophy concerning darkness, light or the flight from the prison of the material world are not extraneous to O'Neill's work, the author proves he was aware of the Platonic image of the cave thanks to its capital importance in the work of some of his intellectual mentors such as F. Nietzsche or Oscar Wilde. Nevertheless, the most significant aim of the author's article is to emphasize both the dramatic benefits and the logical reflections derived, as said before, from reading little by little O'Neill's drama bearing in mind the above mentioned Platonic parameter.

Negative impact of hypocaloric feeding and energy balance on clinical outcome in ICU patients

Résumé Introduction : Les patients nécessitant une prise en charge prolongée en milieu de soins intensifs et présentant une évolution compliquée, développent une réponse métabolique intense caractérisée généralement par un hypermétabolisme et un catabolisme protéique. La sévérité de leur atteinte pathologique expose ces patients à la malnutrition, due principalement à un apport nutritionnel insuffisant, et entraînant une balance énergétique déficitaire. Dans un nombre important d'unités de soins intensifs la nutrition des patients n'apparaît pas comme un objectif prioritaire de la prise en charge. En menant une étude prospective d'observation afin d'analyser la relation entre la balance énergétique et le pronostic clinique des patients avec séjours prolongés en soins intensifs, nous souhaitions changer cette attitude et démonter l'effet délétère de la malnutrition chez ce type de patient. Méthodes : Sur une période de 2 ans, tous les patients, dont le séjour en soins intensifs fut de 5 jours ou plus, ont été enrôlés. Les besoins en énergie pour chaque patient ont été déterminés soit par calorimétrie indirecte, soit au moyen d'une formule prenant en compte le poids du patient (30 kcal/kg/jour). Les patients ayant bénéficié d'une calorimétrie indirecte ont par ailleurs vérifié la justesse de la formule appliquée. L'âge, le sexe le poids préopératoire, la taille, et le « Body mass index » index de masse corporelle reconnu en milieu clinique ont été relevés. L'énergie délivrée l'était soit sous forme nutritionnelle (administration de nutrition entérale, parentérale ou mixte) soit sous forme non-nutritionnelle (perfusions : soluté glucosé, apport lipidique non nutritionnel). Les données de nutrition (cible théorique, cible prescrite, énergie nutritionnelle, énergie non-nutritionnelle, énergie totale, balance énergétique nutritionnelle, balance énergétique totale), et d'évolution clinique (nombre des jours de ventilation mécanique, nombre d'infections, utilisation des antibiotiques, durée du séjour, complications neurologiques, respiratoires gastro-intestinales, cardiovasculaires, rénales et hépatiques, scores de gravité pour patients en soins intensifs, valeurs hématologiques, sériques, microbiologiques) ont été analysées pour chacun des 669 jours de soins intensifs vécus par un total de 48 patients. Résultats : 48 patients de 57±16 ans dont le séjour a varié entre 5 et 49 jours (motif d'admission : polytraumatisés 10; chirurgie cardiaque 13; insuffisance respiratoire 7; pathologie gastro-intestinale 3; sepsis 3; transplantation 4; autre 8) ont été retenus. Si nous n'avons pu démontrer une relation entre la balance énergétique et plus particulièrement, le déficit énergétique, et la mortalité, il existe une relation hautement significative entre le déficit énergétique et la morbidité, à savoir les complications et les infections, qui prolongent naturellement la durée du séjour. De plus, bien que l'étude ne comporte aucune intervention et que nous ne puissions avancer qu'il existe une relation de cause à effet, l'analyse par régression multiple montre que le facteur pronostic le plus fiable est justement la balance énergétique, au détriment des scores habituellement utilisés en soins intensifs. L'évolution est indépendante tant de l'âge et du sexe, que du status nutritionnel préopératoire. L'étude ne prévoyait pas de récolter des données économiques : nous ne pouvons pas, dès lors, affirmer que l'augmentation des coûts engendrée par un séjour prolongé en unité de soins intensifs est induite par un déficit énergétique, même si le bon sens nous laisse penser qu'un séjour plus court engendre un coût moindre. Cette étude attire aussi l'attention sur l'origine du déficit énergétique : il se creuse au cours de la première semaine en soins intensifs, et pourrait donc être prévenu par une intervention nutritionnelle précoce, alors que les recommandations actuelles préconisent un apport énergétique, sous forme de nutrition artificielle, qu'à partir de 48 heures de séjour aux soins intensifs. Conclusions : L'étude montre que pour les patients de soins intensifs les plus graves, la balance énergétique devrait être considérée comme un objectif important de la prise en charge, nécessitant l'application d'un protocole de nutrition précoce. Enfin comme l'évolution à l'admission des patients est souvent imprévisible, et que le déficit s'installe dès la première semaine, il est légitime de s'interroger sur la nécessité d'appliquer ce protocole à tous les patients de soins intensifs et ceci dès leur admission. Summary Background and aims: Critically ill patients with complicated evolution are frequently hypermetabolic, catabolic, and at risk of underfeeding. The study aimed at assessing the relationship between energy balance and outcome in critically ill patients. Methods: Prospective observational study conducted in consecutive patients staying 5 days in the surgical ICU of a University hospital. Demographic data, time to feeding, route, energy delivery, and outcome were recorded. Energy balance was calculated as energy delivery minus target. Data in means+ SD, linear regressions between energy balance and outcome variables. Results: Forty eight patients aged 57±16 years were investigated; complete data are available in 669 days. Mechanical ventilation lasted 11±8 days, ICU stay 15+9 was days, and 30-days mortality was 38%. Time to feeding was 3.1 ±2.2 days. Enteral nutrition was the most frequent route with 433 days. Mean daily energy delivery was 1090±930 kcal. Combining enteral and parenteral nutrition achieved highest energy delivery. Cumulated energy balance was between -12,600+ 10,520 kcal, and correlated with complications (P<0.001), already after 1 week. Conclusion: Negative energy balances were correlated with increasing number of complications, particularly infections. Energy debt appears as a promising tool for nutritional follow-up, which should be further tested. Delaying initiation of nutritional support exposes the patients to energy deficits that cannot be compensated later on.

State of Iowa Long-Term Economic Recovery Strategy Prepared for the Economic Development Administration, U.S. Department of Commerce, October 2010

The Rebuild Iowa Office (RIO) continues to coordinate the state‘s recovery effort from the storms, tornadoes and floods of 2008. Much has been accomplished since the Office‘s last quarterly report was issued in July 2010. State funding has been disbursed to help Iowans with unmet needs and housing. Local governments and entities are utilizing millions of federal dollars so thousands of disaster-impacted homeowners can be offered a buyout. More infrastructure projects are under construction and new neighborhoods are being built with mitigation efforts in mind. However, as Iowa continues to celebrate many successes along the road to recovery, it must also address the numerous challenges that are encountered along the path. Recovering from the state‘s largest disaster must be looked at as a marathon, not a sprint. Over the past three months, the RIO has especially remained focused on helping small business owners impacted by the 2008 disasters. Many disaster-affected businesses have reopened their doors, however their debt load continues to be overwhelming and many still struggle with the timeliness of the disbursement of funds. This report describes how programs and recent modifications are working to assist recovering businesses. This report contains updates on housing progress while outlining the complexities behind certain programs and the bottlenecks communities are facing due to strict federal guidelines for implementation. This following pages also describe how Iowa is implementing Smart Planning principles, publicizing flood awareness through outreach efforts and preparing a blueprint for the state to follow when future disasters occur. As always, the RIO recognizes and thanks the countless leaders and front-line workers from local, regional, state and federal government, businesses, non-profit organizations and private citizens that have provided input, support and leadership. Their dedication to Iowa‘s disaster recovery has made the plans and projects on the following pages possible.

Un modelo de riesgo de crédito basado en opciones compuestas con barrera. Aplicación al mercado continuo español

In this work the valuation methodology of compound option written on a downand-out call option, developed by Ericsson and Reneby (2003), has been applied to deduce a credit risk model. It is supposed that the firm has a debt structure with two maturity dates and that the credit event takes place when the assets firm value falls under a determined level called barrier. An empirical application of the model for 105 firms of Spanish continuous market is carried out. For each one of them its value in the date of analysis, the volatility and the critical value are obtained and from these, the default probability to short and long-term and the implicit probability in the two previous probabilities are deduced. The results are compared with the ones obtained from the Geskemodel (1977).

Viabilidad del sistema de pensiones y reformas por el lado de los ingresos: una aproximación intergeneracional

Este artículo, mediante el método de la Contabilidad Generacional, examina la viabilidad a largo plazo y los efectos sobre la redistribución intergeneracional de la renta del sistema de pensiones español. Dado la enorme deuda acumulada, que se traslada a las generaciones futuras, se explora la posibilidad de introducir políticas de reforma por el lado de los ingresos que pretenden mitigar la fuerte dependencia demográfica de las finanzas de la Seguridad Social. El principal resultado obtenido es que la gravedad de la crisis demográfica hace que estos tipos de medidas estudiadas sean claramente insuficientes para restaurar el equilibrio intergeneracional.

Iowa Natural Resources, Agency Performance Plan, FY2013

The work of the Department of Natural Resources impacts the lives of all Iowans. Iowans deserve a clean environment and quality natural areas for public use and enjoyment. This report reflects the progress made during fiscal year 2013 (FY13) toward our goals and provides information regarding the condition of our state’s natural resources and the effectiveness of our programs. In FY13, we continued to improve collaboration with other executive branch agencies. The DNR and DOT work very closely on the issuance of permits needed for road and bridge constructions, but recently we have also been working together to meet the administrative needs of the agencies. The DNR is working closely with the DOT to adopt an Electronic Records Management System used by the DOT. This system will improve accessibility to public documents and reduce the amount of paper files retained in storage. The DNR also continues to improve collaboration with other agencies, such as the Iowa Economic Development Authority as we work closely with them on business development in the state. The DNR strives to continually improve our customer service and how we can meet Iowan’s needs. As an example, the online reservation system for campground reservations has grown over the past eight years so that now 88% of the camping reservations are made online. The DNR continues to improve our online presence and accessibility. In FY13 the Iowa Legislature approved paying off the State’s bond debt used to construct Honey Creek Resort State Park. By removing this debt, the DNR will be able to focus more on the future of the Resort, rather than the past debt. Finally, in August of 2012, the DNR was faced with a tragic accident, where a seasonal parks employee died after rolling a mower into a lake. This incident has caused us to establish a Safety Program at the DNR and to review all of our departmental safety trainings, programs, and equipment. By focusing on our employee’s safety and well being, it is another way that we can demonstrate that at the DNR, our employees are our greatest asset.

Five essays on bankruptcy

Chapter 2 Bankruptcy Initiation In The New Era of Chapter 11 2.1 Abstract The bankruptcy act of 1978 placed corporate managers (as debtor in possession) in control of the bankruptcy process. Between 2000 and 2001 managers apparently lost this control to secured creditors. This study examines financial ratios of firms filing for bankruptcy between 1993 and 2004 and tests the hypothesis that the change from manager to creditor control created or exacerbated the managerial (and dominant creditor) incentive to delay bankruptcy filing. We find a clear deterioration in the financial conditions of firms filing after 2001. This is consistent with managers (or creditors who control them) delaying filing for bankruptcy. We also observe patterns of operating losses and liquidations that suggest adverse economic consequences from such delay. Chapter 3 Bankruptcy Resolution: Priority of Claims with the Secured Creditor in Control 3.1 Abstract We present new evidence on the violation of priority of claims in bankruptcy using a sample of 222 firms that tiled for Chapter 11 bankruptcy over the 1993-2004 period. Our study reveals a dramatic reduction in the violations of priority of claims compared to research on prior periods. These results are consistent with changes in both court practices and laws transferring power to the secured creditors over our sample period. We also find an increase in the time from the date of a bankruptcy filing to reaching plan confirmation where priority is not violated. Chapter 4 Bankruptcy Resolution: Speed, APR Violations and Delaware 4.1 Abstract We analyze speed of bankruptcy resolution on a sample of 294 US firms filing for bankruptcy in the 1993-2004 period. We find strong association between type of Chapter II filing and speed of bankruptcy resolution. We also find that violations to the absolute priority rule reduce the time from bankruptcy filing to plan confirmation. This is consistent with the hypothesis that creditors are willing to grant concessions in exchange for faster bankruptcy resolution. Furthermore, after controlling for the type of filing and violations to the absolute priority rule, we do not find any difference in the duration of the bankruptcy process for firms filing in Delaware, New York, or other bankruptcy districts. Chapter 5 Financial Distress and Corporate Control 5.1 Abstract We examine the replacement rates of directors and executives in 63 firms filing for bank ruptcy during the 1995-2002 period. We find that over 76% of directors and executives are replaced in the four year period from the year prior to the bankruptcy filing through three years after. These rates are higher than those found in prior research and is consistent with changes in bankruptcy procedures and practice (i.e. the increased secured creditors control over the process due to both DIP financing and changes in the Uniform Commercial Code) having a significant impact on the corporate governance of firms in financial distress. Chapter 6 Financial Statement Restatements: Decision to File for Bankruptcy 6.1 Abstract On a sample of 201 firms that restated their financial statements we analyze the process of regaining investor trust in a two year period after the restatement. We find that 20% of firms that restate their financial statements tile for bankruptcy or restructure out of court. Our results also indicate that the decisions to change auditor or management is correlated with a higher probability of failure. Increased media attention appears to partly explain the decision of firms to restructure their debt or tile for bankruptcy.

Financial reforms and capital flows: Insights from general equilibrium

As a result of debt enforcement problems, many high-productivity firms in emergingeconomies are unable to pledge enough future profits to their creditors and this constrains thefinancing they can raise. Many have argued that, by relaxing these credit constraints, reformsthat strengthen enforcement institutions would increase capital flows to emerging economies. Thisargument is based on a partial equilibrium intuition though, which does not take into account theorigin of any additional resources that flow to high-productivity firms after the reforms. We showthat some of these resources do not come from abroad, but instead from domestic low-productivityfirms that are driven out of business as a result of the reforms. Indeed, the resources released bythese low-productivity firms could exceed those absorbed by high-productivity ones so that capitalflows to emerging economies might actually decrease following successful reforms. This resultprovides a new perspective on some recent patterns of capital flows in industrial and emergingeconomies.