1-4 September 2015
Angers - France
Europe/Paris timezone

Debt negotiation with firms’ cross-holdings of securities

2 Sep 2015, 17:10
Angers - France

Angers - France


Mr Teruyoshi Suzuki (Hokkaido University)


We analyze the interaction of the debt renegotiation between two firms that cross-hold their issuing debts and equities. When the firms are reciprocally the major shareholder and/or debt holder of the other firms, the possibility of debt renegotiation will affect each other. We first develop models of debt renegotiation scheme: debt equity swap and strategic debt service with game-theoretic setting under continuous time models. We then derive the optimal boundaries in each model to offer debt renegotiation by equity holders of the one firm to those of the other firm. We show that the simultaneous debt renegotiation can happen when firms cross-hold their debts and we present the comparative statics of the renegotiation boundaries.

Primary author

Mr Teruyoshi Suzuki (Hokkaido University)


Dr Kyoko Yagi (Faculty of Systems Science and Technology, Akita Prefectural University)

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