Corporate response to distress
Subtitle: evidence from the Asian financial crisis
By: by Mara Faccio and Rajdeep Sengupta
Contributors: Sengupta, Rajdeep; Federal Reserve Bank of St. Louis
Series: Working paper -- 2006-044A; Working paper (Federal Reserve Bank of St. Louis : Online) -- 2006-044A.
Publisher: Federal Reserve Bank of St. Louis
Published: 2006
Place of publication: St. Louis, Mo.]
Language: eng
Format: [electronic resource] :
Description: "This paper provides a comprehensive examination of the ways in which companies respond to a country-wide crisis through the restructuring of their assets (through asset sales, mergers or liquidations) or liabilities.  We find the restructuring of liabilities to be the most common type of response.  On the other hand, we argue that firms may be reluctant to engage in major asset sales due to substantial price discounts that need to be applied to these transactions during the crisis.  In fact, we document that transaction multiples dropped by 40% during the crisis, compared to a pre-crisis period.  We contrast financial and corporate governance considerations and find strong support for the notion that, during a crisis, financial constraints have a large impact on the restructuring choice.  However, we find corporate governance (e.g., control) considerations to matter only marginally both in statistical and economic terms"--Federal Reserve Bank of St. Louis web site.
Notes: Title from PDF file as viewed on 7/27/2006.

Includes bibliographical references.

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Mode of access: World Wide Web.