About the Book ix
1 Introduction, Overview, and Assumptions 1
I BASIC CONCEPTS 19
2 The Contingent Value of Debt and Equity 21
3 Senior and Subordinated Debt 63
4 Institutional and Empirical Characteristics of Bankruptcy 79
5 Bankruptcy Costs and Violations of the Absolute Priority Rule 111
II SECURITIES WITH CALL AND CONVERSION
OPTIONS 125
6 Callable Debt 127
7 Early Redemption of Callable Debt 143
8 Convertible Debt 149
9 Conversion Forcing Calls of Convertible Debt 179
10 Warrants 187
III PAYMENTS TO CREDITORS AT DIFFERENT TIMES 209
11 Multiple Debt Securities 211
12 Coupon-Bearing Debt 233
13 Pay-in-Kind Bonds 249
IV DIVIDENDS AND OTHER DISCRETIONARY
DISTRIBUTIONS TO SHAREHOLDERS 271
14 Dividend-Paying Stock 273
15 Optimal Dividend Policy 283
16 Empirical Characteristics of Corporate Dividend Policy 291
17 Leveraged Recapitalizations 315
18 Spin-o¤s 335
ASSESSING THE METHODOLOGY 365
19 Empirical Tests of Contingent Value Models 367
20 Managerial Discretion and Implicit Management Options 377
References 389
Index 409