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Bonds governed under German law would normally not contain collective action clauses, ie provisions dealing with majority decisions by bondholders by which certain bond terms may be altered or waived. This is because it is uncertain whether, in the absence of a statutory basis, a decision taken by a majority of bondholders would be binding upon a dissenting minority. For certain circumstances, however, a statutory basis exists in the form of a law enacted in 1899 which, during the last decades, has been very rarely used. This paper discusses in what cases the law may be invoked, what decisions can be made by bondholders and what procedural requirements must be observed for getting to a binding and unchallengeable decision.

This article combines two sources of data to shed light on the nature of transactional legal work. The first consists of stories about contracts that circulate among elite transactional lawyers. The stories portray lawyers as ineffective market actors who are uninterested in designing superior contracts, who follow rather than lead industry standards, and who depend on governments and other outside actors to spur innovation and correct mistakes. We juxtapose these stories against a dataset of sovereign bond contracts produced by these same lawyers. While the stories suggest that lawyers do not compete or design innovative contracts, their contracts suggest the contrary. The contracts, in fact, are consistent with a market narrative in which lawyers engage in substantial innovation despite constraints inherent in sovereign debt legal work. Why would lawyers favor stories that paint them in a negative light and deny them a potent role as market actors? We conclude with some conjectures as to why this might be so.

Corporate bonds have been a major source of medium and long-term financing in Brazil. We analyze how corporate bond covenants have been used to mitigate agency costs between shareholders and bondholders. Our data includes 119 corporate bond indentures issued in Brazil from 1998 to 2001. This paper analyzes whether public investors have demanded stricter terms in corporate bond indentures. When comparing to previous studies of Anderson (1999) and of Filgueira and Leal (2001), we found empirical evidence that: (a) more bond issues with no indexed inflation features, but more floating rate interest features to match market needs; (b) no major changes for contingent maturity features; (c) loose covenants with respect to dividend and financing actions; and (d) tighter covenants regarding change in control and/or ownership and negative pledge. There is empirical evidence that the role of sponsor may partially mitigate risks borne by bondholders.

Real‐options have moved from being an academic theory to a decision‐making tool that is being used by managers. The thinking underpinning real options has remained true to its financial options‐pricing heritage, which means that it is based on an assumption of managerial risk‐neutrality. Managers can be risk‐seeking or risk‐averse, depending on whether or not they are meeting performance targets. This paper aims to explore the questions of what happens when the assumption of risk neutrality is relaxed and how the outcomes of managerial decisions on investments affect the firm's stockholders and bondholders.

The work is conceptual in its approach.

Managers, stockholders, or bondholders do not lose when managers are performing above target and when environmental uncertainty is high, or below target when environmental uncertainty is low, but managers win at the expense of stockholders when they are meeting performance targets and uncertainty is low, and managers win at the expense of bondholders when they are performing below target and uncertainty is high.

Propositions are provided for subsequent empirical testing. The paper holds environmental complexity and munificence constant, but discusses the implication of that in the conclusions.

The research has implications for shareholders and bondholders. It also has implications for Boards of Directors and the actions they take within their monitoring and control duties.

Because the paper is able to separate the constructs of uncertainty and risk, this is the first work that has been able to fully relax the assumption of risk neutrality that underpins real‐options theory.

The purpose of this paper is to examine the relationship between corporate governance (CG) and firms’ bond recovery rates (RRs). The authors hypothesize that governance features impact RRs by controlling agency costs that result from conflicts between bondholders and shareholders. The authors also test the relationship between CG and RRs during the last crisis.

The authors use a generalized method of moments regression model to test the relationship between CG and firms’ bond RRs. The authors employ a direct measure of recoveries rates from Moody’s ultimate recovery database covering the period from 2003 to 2012. Both firm-level CG and country-level variables are used to examine the determinants of corporate bonds RRs.

The results support a significant impact of CG mechanisms on bond RRs mainly during crisis period. The authors find that firms operating with CEO-Duality decrease their bond RRs during financial crisis. This implies wealth transfers from bondholders to shareholders and provides one explanation why some firms operate with weak governance.

This paper provides the first direct evidence that corporate bond RRs are directly related to CG mechanisms. The authors combine firm-level CG and country-level variables to examine the determinants of corporate bonds RRs. Earlier studies focussed on financial firm-level data and macro-economic variables. The authors also test the impact of board composition and ownership structure on bond recoveries.

The regularity of default by countries on their sovereign debt has led to the establishment of a number of evolving institutions or “Clubs”. These institutions' objective is to optimise the impact of imminent default or actual default on both international lending and borrowing. The purpose of this article is to discuss the informal institutions concerned with managing debt between national governments – the Paris Club, between governments and commercial banks – the London Club – and the currently ad hoc dealings with sovereign bonds.

The Clubs' changing approaches through the increasing depth and number of international financial crises from the Latin American debt crises of the 1980s, the Asian financial crisis of the late 1990s and the circumstances of the ex‐Soviet economies, plus the ongoing debt sub‐Saharan African debt crisis are discussed.

The shifts in the principles underlying the debt management system are manifest by the changing content of reschedulings, from simply deferring payments to actual reduction in their present value.

The functioning of principles of comparable treatment of all creditors are discussed with respect to the growing need for a body representing bondholders' interests.

The paper highlights the IMF's multiple and sometimes conflicting roles in the international financial system.

This chapter discusses the cross-sectional relationships between national and local government, citizens and hybrid organisations via a historical case study, that of the London Passenger Transport Board (LPTB) during its existence 1933–1948. It finds that the LPTB was a good example of hybridity located in an earlier time period than most research examines, and that the arrangements by which it was governed resulted in some counter-intuitive outcomes which challenge the findings from research located in more recent periods concerning the performance of hybrid organisations. However, it supports other research proposing that the role of elites as well as institutional contexts is a key factor in the creation and operation of semi-autonomous organisations, and it accepts that objectively measuring the performance in order to make meaningful comparison is not only extremely problematic but may even inhibit performance.

The purpose of this paper is to discuss and evaluate the sovereign default restructuring options in the European Monetary Union (EMU).

The paper examines financial policy options from a politico‐economic‐legal perspective. It relies primarily on secondary data analysis.

Sovereign default restructuring an unthinkable phenomenon in the hitherto affluent EMU could now be a possibility because of the lack of political cohesion and the realities of two‐speed European Union.

The paper relies extensively on secondary data. Future research through empirical multiple case studies would enrich the insights of this paper.

Insights from the paper would be of benefit to lawmakers, financial supervisors, financial institutions and investors in general.

The paper's main value lies in its use of multiple lenses to evaluate a serious financial issue in the EMU.