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SUMMARY:Corporate Leverage and Employees' Rights in Bankruptcy
DTSTART:20161209T103000
DTEND:20161209T120000
DTSTAMP:20260505T095320Z
UID:a1b5c5738fdb189b5d698323f7fd32257c5245dba0ed5e416a831793
CATEGORIES:Conferences - Seminars
DESCRIPTION:Andrew ELLUL (Indiana University)\nThe seniority of employees
 ’ claims in the liquidation of insolvent firms\, and their rights in the
  renegotiation of their debt varies greatly across countries. We show that
  the balance between these rights of employees and those of other creditor
 s should affect the leverage chosen by firms. In a simple model of strateg
 ic leverage\, employees’ seniority is predicted to increase the positive
  response of leverage to appreciation of its real estate or an increase in
  its revenue\, while stronger employees’ rights in the renegotiation of 
 corporate debt have the opposite effect. These predictions differ starkly 
 from those that obtain if firms’ leverage is determined by a collateral 
 constraint. To test them\, we construct novel measures of employees’ pro
 tection in bankruptcy via questionnaires to law firms and other sources\, 
 and investigate whether these measures affect the response of firm leverag
 e in a sample of 13\,809 companies in 28 countries. We find that increases
  in the value of firms’ real estate or profits are associated with large
 r increases in leverage by companies whose employees have strong seniority
  in liquidation and weaker rights in restructuring\, consistently with the
  strategic use of leverage\, not with credit rationing.\n 
LOCATION:UNIL\, Extranef\, room 126 https://planete.unil.ch/plan/?local=EX
 T-126
STATUS:CONFIRMED
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