Working Paper
The role of warrants in corporate reorganizations
Abstract: An argument that informational asymmetries explain why the original shareholders of some firms emerge from Chapter 11 bankruptcy proceedings with stock in the reorganized company, while others receive warrants. By proposing a reorganization plan in which they receive warrants, the original stockholders of a firm with good future prospects can signal their superior information to the creditors in a way that firms with poor prospects will not wish to mimic.
Keywords: Bankruptcy; options; Stocks;
Access Documents
File(s):
File format is application/pdf
https://fraser.stlouisfed.org/scribd/?item_id=494633&filepath=/docs/historical/frbclev/wp/frbclv_wp1995-12.pdf#scribd-open
Description: Full text
Authors
Bibliographic Information
Provider: Federal Reserve Bank of Cleveland
Part of Series: Working Papers (Old Series)
Publication Date: 1995
Number: 9512