Skip to main content
SpringerLink
Log in

Financial Restructuring

  • Chapter
The Executive Guide to Corporate Restructuring

Part of the book series: IE Business Publishing ((IEBP))

  • 213 Accesses

Abstract

Any company dealing with a corporate restructuring process has a lot of problems. To solve them it’s necessary to understand their nature and causes. Most problems in a company come from the operating aspects, not from the financial ones. Consequently, before trying to set up a permanent financial solution for a company, we need to understand why the company is not generating enough cash and we have to conceive a realistic and doable business plan to address the critical issues. In other words, before trying to finance an operational problem, try to solve it. Financing operating inefficiencies is the best way to end in financial distress.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution
Chapter
USD 29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD 39.99
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD 49.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info
Hardcover Book
USD 44.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  • Ahn, D., Figlewski, S. and Gao, B. (1998), ‘The Adaptive Mesh Model: A New Approach to Efficient Option Pricing’, Discussion Paper, New York University Stern School of Business.

    Google Scholar 

  • Altman, E.I. (1984), ‘A Further Empirical Investigation of the Bankruptcy Cost Question’, The Journal of Finance, 39, 4, 1067–1089.

    Article  Google Scholar 

  • Andrade, G. and Kaplan, S. (1998), ‘How Costly is Financial Distress (not Economic)? Evidence from Highly Leveraged Transactions that Became Distressed’, The Journal of Finance, 23, 5, 1443–1493.

    Article  Google Scholar 

  • Black, F. and Cox, J. (1976), ‘Valuing Corporate Securities: Some Effects of Bond Indenture Provisions’, The Journal of Finance, 31, 2, 351–367.

    Article  Google Scholar 

  • Black, F. and Scholes, M. (1973), ‘The Pricing of Options and Corporate Liabilities’, Journal of Political Economy, 81, 3, 637–654.

    Article  Google Scholar 

  • Boyle, P. and Lau, S. (1994), ‘Bumping Up against the Barrier with the Binomial Method’, Journal of Derivatives, 1 (4), 6–14.

    Article  Google Scholar 

  • Brennan, M.J. and Schwartz, E.S. (1978), ‘Corporate Income Taxes and the Problem of Optimal Capital Structure’, The Journal of Business, 51, Jan., 103–114.

    Article  Google Scholar 

  • Brennan, M.J. and Schwartz, E.S. (1980), ‘Analyzing Convertible Bonds’, Journal of Financial and Quantitative Analysis, 15, 907–929.

    Article  Google Scholar 

  • Cannaday, R. and Yang, T. (1996), ‘Optimal Leverage Strategy: Capital Structure in Real Estate Investments’, Journal of Real Estate Finance and Economics, 13, 263–271.

    Article  Google Scholar 

  • Cheuk, T. and Vorst, T. (1996), ‘Complex Barrier Options’, The Journal of Derivatives, 4, 8–22.

    Article  Google Scholar 

  • Ciochetti, B. (2004), ‘Loss Characteristics of Commercial Mortgage Foreclosures’.

    Google Scholar 

  • Ciochetti, B., Deng, Y., Lee, G., Shilling, J. and Yao, R. (2003), ‘A Proportional Hazard Model of Commercial Mortgage Default with Originator Bias’, Journal of Real Estate Finance and Economics, 27, 1, 5–23.

    Article  Google Scholar 

  • Cohen, R.D. (2001), ‘An Analytical Process for Generating the WACC Curve and Locating the Optimal Capital Structure’. http://rdcohen.www.6.50megs.com/abstract.htm.

  • Damodaran, A. (2001), Applied Corporate Finance, John Wiley Finance, New York.

    Google Scholar 

  • Derman, E., Kani, I., Ergener, D. and Bardhan, I. (1995), ‘Enhanced Numerical Methods for Options with Barriers’, Goldman Sachs Quantitative Strategies Research Notes.

    Google Scholar 

  • Fourt, R., Matysiak, G. and Gardner, A. (2006), ‘Capturing UK Real Estate Volatility’, Paper presented at the 13th Annual European Real Estate Society (ERES) Conference, Weimar, Germany.

    Google Scholar 

  • Fou, Q., LaCour-Little, M. and Vandell, K. (2003), ‘Commercial Mortgage Prepayments under Heterogeneous Prepayment Penalty Structures’, Journal of Real Estate Research, 25, 3, 15–37.

    Google Scholar 

  • Gau, G. and Wang, K. (1990), ‘Capital Structure Decisions in Real Estate Investment’, Journal of American Real Estate and Urban Economics Association, 18, 4, 501–521.

    Article  Google Scholar 

  • Graham, J. (2000), ‘How big are the Tax Benefits of Debt?’, Journal of Finance, 55, 5, 1901–1941.

    Article  Google Scholar 

  • Graham, J. and Harvey, C. (2002), ‘How do CFOs make Capital Budgeting and Capital Structure Decisions?’, Journal of Applied Corporate Finance, 15, 1, 8–22.

    Article  Google Scholar 

  • Haug, E.G. (1998), The Complete Option Pricing Formulas, McGraw Hill.

    Google Scholar 

  • Hull, J.C. (2003), Options, Futures and Other Derivatives, (5th ed.), Prentice Hall.

    Google Scholar 

  • Kraus, A. and Litzenberger, R.H (1973), ‘A State Preference Model of Optimal Financial Leverage’, Journal of Finance, 28, 4, 911–922.

    Article  Google Scholar 

  • Kamrad, B. and Ritchken, P. (1991), ‘Multinomial Approximating Models for Options with k State Variables’, Management Science, 37 (12), 1640–1652.

    Article  Google Scholar 

  • Kane, A., Markus, A.J. and McDonald, R.L. (1984), ‘How Big is the Tax Advantage to Debt?’, Journal of Finance, 39, 3, 841–853.

    Article  Google Scholar 

  • Kane, A., Markus, A.J. and McDonald, R.L. (1985), ‘Debt policy and the Rate of Return Premium to Leverage’, Journal of Financial and Quantitative Analysis, 20, 4, 479–499.

    Article  Google Scholar 

  • Leland, H. (1994), ‘Corporate Debt Value, Bond Covenants, and Optimal Capital Structure’, Journal of Finance, 49, 4, 1213–1252.

    Article  Google Scholar 

  • Leland, H. and Toft, K.B. (1996), ‘Optimal Capital Structure, Endogenous Bankruptcy, and the Term Structure of Credit Spreads’, Journal of Finance, 51, 3, 987–1019.

    Article  Google Scholar 

  • Longstaff, F. and Schwartz, E. (1995), ‘A Simple Approach to Valuing Risky Fixed and Floating Rate Debt’, Journal of Finance, 50, 3, 789–821.

    Article  Google Scholar 

  • Lintner, J. (1965), ‘Security Prices, Risk, and Maximal Gains from Diversification’, Journal of Finance, 20, 4, 587–615.

    Google Scholar 

  • Merton, R.C. (1974), ‘On the Pricing of Corporate Debt: The Risk Structure of Interest Rates’, Journal of Finance, 29, 2, 449–470.

    Google Scholar 

  • Merton, R.C. (1977), ‘On the Pricing of Contingent Claims and the Modigliani-Miller Theorem.’, Journal of Financial Economics, 5, 241–249.

    Article  Google Scholar 

  • Merton, R.C. (1991), Continuous Time Finance, Blackwell.

    Google Scholar 

  • Modigliani, F. and Miller, M. (1958), ‘The Cost of Capital, Corporation Finance and the Theory of Investment’, American Economic Review, June, 261–297.

    Google Scholar 

  • Modigliani, F. and Miller, M. (1963), ‘Corporate Income Taxes and the Cost of Capital: A Correction’, American Economic Review, June, 433–443.

    Google Scholar 

  • Ritchken, P. (1995), ‘On Pricing Barrier Options’, The Journal of Derivatives, 3, 2, 19–28.

    Article  Google Scholar 

  • Sharpe, W.F. (1964), ‘Capital Asset Prices: A Theory of Market Equilibrium Under Conditions of Risk’, Journal of Finance, 19, 3, 425–442.

    Google Scholar 

  • The European Group of Valuers’ Association (2000), ‘European Valuation Standards 2000’, (4th ed.), Estates Gazette.

    Google Scholar 

  • Titman, S. and Torous, W. (1989), ‘Valuing Commercial Mortgages: An Empirical Investigation of the Contingent Claims Approach to Pricing Risky Debt’, Journal of Finance, 44, 2, 345–373.

    Google Scholar 

  • Titman, S., Tompaidis, S. and Tsyplakov, S. (2004), ‘Determinants of Credit Spreads in Commercial Mortgages’, Working Paper.

    Google Scholar 

  • Trigeorgis, L. (1993), ‘The Nature of Option Interactions and the Valuation of Investments with Multiple Real Options’, Journal of Financial and Quantitative Analysis, 28, 1, 1–20.

    Article  Google Scholar 

  • Vandell, K., Barnes, W., Hartzell, D., Kraft, D. and Wendt, W. (1993), ‘Commercial Mortgage Defaults: Proportional Hazards Using Individual Loan Histories’, Journal of American Real Estate and Urban Economics Association.

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. IE Business School, Madrid, Spain

    Francisco J. López Lubián

Authors
  1. Francisco J. López Lubián
    View author publications

    You can also search for this author in PubMed Google Scholar

Copyright information

© 2014 Francisco J. López Lubián

About this chapter

Cite this chapter

Lubián, F.J.L. (2014). Financial Restructuring. In: The Executive Guide to Corporate Restructuring. IE Business Publishing. Palgrave Macmillan, London. https://doi.org/10.1057/9781137389367_5

Download citation

Publish with us

Policies and ethics

Search

Navigation