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Article
Publication date: 1 November 1997

George G. Kaufman

This paper presents issues arising from the enactment of legislation that changes the priority ordering of claims by uninsured depositors and the FDIC in the resolution of costly…

Abstract

This paper presents issues arising from the enactment of legislation that changes the priority ordering of claims by uninsured depositors and the FDIC in the resolution of costly failed insured banks and thrifts. Under the legislation, uninsured domestic depositors and the FDIC receive preference in the payment of their claims in the resolutions of failed insured institutions over both foreign depositors and general creditors. As a result of the legislation, one can expect changes in the behavior of nonpreferred claimants.

Details

Managerial Finance, vol. 23 no. 11
Type: Research Article
ISSN: 0307-4358

Open Access
Article
Publication date: 13 July 2022

Cathy Zishang Liu, Xiaoyan Sharon Hu and Kenneth J. Reichelt

This paper empirically examines whether the order of liability and preferred stock accounts presented on the balance sheet is consistent with how the stock market values their…

Abstract

Purpose

This paper empirically examines whether the order of liability and preferred stock accounts presented on the balance sheet is consistent with how the stock market values their riskiness.

Design/methodology/approach

This paper measures a firm’s riskiness with idiosyncratic risk and employs the first-difference design to test the relation between idiosyncratic risk and the order of current liabilities, noncurrent liabilities and preferred stock, respectively. Further, the paper tests whether operating liabilities are viewed as riskier than financial liabilities. Finally, the authors partition their sample based on the degree of financial distress and investigate whether the results differ between the two subsamples.

Findings

The paper finds that current liabilities are viewed as riskier than noncurrent liabilities and preferred stock is viewed as less risky than current and noncurrent liabilities, consistent with the ordering on the balance sheet. Further, the paper finds that operating liabilities are viewed as riskier than financial liabilities. Finally, the authors find that total liabilities and preferred stock (redeemable and convertible classes) are viewed as riskier for distressed firms than for nondistressed firms.

Originality/value

The authors thoroughly investigate the riskiness of several classes of claims and document that the classification of liabilities and preferred stock classes is relevant to common stockholders for assessing their associated risk.

Details

China Accounting and Finance Review, vol. 24 no. 3
Type: Research Article
ISSN: 1029-807X

Keywords

Article
Publication date: 1 February 2001

MORTON N. LANE

In the convergence between the capital markets and reinsurance markets, the prime mover of insurance risk into capital markets have been investment banks. Also, among the most…

Abstract

In the convergence between the capital markets and reinsurance markets, the prime mover of insurance risk into capital markets have been investment banks. Also, among the most active leveraged underwriters of capital market credit risk are reinsurers, as opposed to hedge funds or banks. A key example of the institutional consequences of “convergence,” in particular of product design are Collateralized Debt Obligations (CDOs). CDOs combine a managed portfolio of bonds or loans with a hierarchy of claims or priority of loss payments (typical of insurance structures). Early buyers of CDOs were typically high‐yield bond portfolio managers. More recently, reinsurers have come to appreciate the “insurance nature” of these CDO structures, and multiline reinsurers have begun to support CDOs via financial guarantees.

Details

The Journal of Risk Finance, vol. 2 no. 3
Type: Research Article
ISSN: 1526-5943

Article
Publication date: 1 June 1991

Howard Johnson

“Companies, particularly those which sell goods or services direct to the public, regard their trade marks (whether brand names or pictorial symbols) as being among their most…

Abstract

“Companies, particularly those which sell goods or services direct to the public, regard their trade marks (whether brand names or pictorial symbols) as being among their most valuable assets. It is important therefore for a trading nation such as the United Kingdom to have a legal framework for the protection of trade marks which fully serves the needs of industry and commerce. The law governing registered trade marks is however fifty years old and has to some extent lost touch with the marketplace. Moreover it causes some of the procedures associated with registration to be more complicated than they need be.” This introductory paragraph to the Government's recent White Paper on “Reform of Trade Marks Law” indicates that reform is in the air. The primary pressure for reform has emanated from Brussels with the need to harmonise national trade mark laws before the advent of the Single European market on 1st January 1993. To this end the Council of Ministers adopted a harmonisation directive in December 1988 which must be translated into the national laws of member states by 28th December 1991.

Details

Managerial Law, vol. 33 no. 6
Type: Research Article
ISSN: 0309-0558

Article
Publication date: 8 June 2015

Ronald Sverdlove

– The purpose of this paper is to show how corporate policy with respect to the seniority structure of debt changes after a merger.

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Abstract

Purpose

The purpose of this paper is to show how corporate policy with respect to the seniority structure of debt changes after a merger.

Design/methodology/approach

The author uses data on the seniority and other properties of outstanding bonds of acquiring and target firms before mergers and of the combined firm after the merger. The author tests whether a combined firm that has acquired junior debt in the merger attempts to move toward the senior-only structure of the acquiring firm before the merger.

Findings

The author finds that acquiring firms do not rapidly move back toward that structure after acquiring senior debt.

Research limitations/implications

The results of this study are consistent with those of many recent studies on capital structure, which find that changes in capital structure tend to persist, and that firms are slow to revert to previous structures aftershocks, such as those that may result from mergers.

Practical implications

The paper suggests that there may be an advantage for firms to sell off acquired junior debt after a merger.

Originality/value

This paper extends previous studies of capital structure to the more detailed level of debt seniority structure.

Details

Managerial Finance, vol. 41 no. 6
Type: Research Article
ISSN: 0307-4358

Keywords

Article
Publication date: 22 December 2021

Majid Parchamijalal, Saeed Moradi and Mohsen Zabihi Shirazi

Claim formation is a fact and a regular occurrence in construction industry projects and often leads to a waste of money and time for organizations. Organizations can, however…

Abstract

Purpose

Claim formation is a fact and a regular occurrence in construction industry projects and often leads to a waste of money and time for organizations. Organizations can, however, reduce and control claims by promoting an integrated claim management system and improving productivity in the results of the claims. Establishing a claim management office is one of the ways to help organizations achieve this.

Design/methodology/approach

Based on library research, expert opinion and analysis of organizations' contracts as case studies and identifying the root causes of the claim, this paper proposes a claim management office maturity model and determines its levels.

Findings

This paper proposes a claim management office maturity model and also determines its levels. The general structure of this model is based on three parameters: “characteristics of each level,” “requirements of each level” and “transition period of each level” in five levels, where the first level is the most basic level and level five is the highest level of the implementation of a claim management office in the organization.

Originality/value

It can be clearly emphasized that this research is one of the first research studies that has dealt with the issue of claim management office in the construction industry and has proposed the model of maturity and development of claim management office in the organization. The use of numerous and experienced experts in achieving the results and case organizations to develop this research has increased the value and credibility of this research. This study also helps to improve the level of claim management in construction industry organizations so that these organizations can implement each level of claim management maturity model in the organization according to their competence and need for claim management. And by implementing it correctly, solve or reduce the problems of claim management in the organization and their projects.

Details

Engineering, Construction and Architectural Management, vol. 30 no. 1
Type: Research Article
ISSN: 0969-9988

Keywords

Article
Publication date: 26 June 2009

Jack Camiolo, Salvatore Cantale and Michael Purcell

The purpose of this paper is to show how contingent claim valuation and, more precisely, structural models, can be used to value the debt and the equity of a corporation. The…

Abstract

Purpose

The purpose of this paper is to show how contingent claim valuation and, more precisely, structural models, can be used to value the debt and the equity of a corporation. The objective is to provide a general and unified valuation framework.

Design/methodology/approach

A discrete version of the Geske model in a binomial‐like environment is implemented. To make the analysis more applied, real data of a corporation – Lucent Technologies, Inc. are used – and the valuation is attempted.

Findings

Structural models can be used as a practical valuation tool. The results that are obtained are close to market data. Additionally, the authors are able to determine the price of some non‐traded claims (debt).

Research limitations/implications

While the more direct implication is that structural models can be used as a practical valuation tool, more applied research is needed to better calibrate the models.

Originality/value

To the applied finance literature is contributed by presenting a way of estimating the value of corporate debt and equity by calibrating a discrete version of Geske model. It is believed that this approach is not only interesting from the academic point of view, but can also serve as a useful tool for practitioners.

Details

International Journal of Managerial Finance, vol. 5 no. 3
Type: Research Article
ISSN: 1743-9132

Keywords

Abstract

Details

Microfinance and Development in Emerging Economies
Type: Book
ISBN: 978-1-83753-826-3

Article
Publication date: 6 May 2014

Daniel C. Hardy

This paper aims to clarify the effects of introducing depositor preference on resolution costs, probability of default and bank funding costs, allowing for the possibility of

Abstract

Purpose

This paper aims to clarify the effects of introducing depositor preference on resolution costs, probability of default and bank funding costs, allowing for the possibility of collateralized funding.

Design/methodology/approach

The importance of conflict among creditors in generating bankruptcy costs is documented. A model of such a conflict is provided, which is then used in analyzing the effects of depositor preference and other forms of asset encumbrance. The model takes into account the reactions of providers of secured and unsecured financing.

Findings

Depositor preference and collateralization of borrowing may reduce the cost of settling the conflicts among creditors that arises in case of resolution or bankruptcy. This net benefit, which may be capitalized into the value of the bank rather than affect creditors’ expected returns, should result in lower overall funding costs and thus a lower probability of distress despite increasing encumbrance of the bank’s balance sheet. The benefit is maximized when resolution is initiated early enough for preferred depositors to remain fully protected.

Research limitations/implications

The interaction of asset encumbrance with liquidity risk is not addressed directly.

Practical implications

The issues addressed on the paper are currently the subject of debate by regulators and market participants. There are direct implications for prudential regulation and bank resolution policies.

Originality/value

The theory of conflict resolution is applied to bankruptcy and bank resolution, generating rigorous analysis of an important practical issue.

Details

Journal of Financial Regulation and Compliance, vol. 22 no. 2
Type: Research Article
ISSN: 1358-1988

Keywords

Article
Publication date: 1 October 2002

Christina Y.M. Ng

The Asian financial turmoil has resulted in widespread corporate difficulties and collapses in the Asia‐Pacific region. There is an urgent need of corporate recovery and…

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Abstract

The Asian financial turmoil has resulted in widespread corporate difficulties and collapses in the Asia‐Pacific region. There is an urgent need of corporate recovery and insolvency administration in the area. This paper aims at reviewing and analysing the insolvency law and practices in the Chinese mainland and Hong Kong of the People’s Republic of China (PRC). Foreign investors should possess the above knowledge in order to better protect themselves with their investments in the PRC. It is also envisaged that with improvement in corporate recovery procedures and reforms in insolvency administration, the PRC can pursue its economic performance further in the twenty‐first century with its accession to the World Trade Organisation.

Details

Managerial Auditing Journal, vol. 17 no. 7
Type: Research Article
ISSN: 0268-6902

Keywords

11 – 20 of over 36000