We argue that stronger debt enforcement in bankruptcy can reduce indirect costs of financial distress: (i) by increasing the likelihood of restructuring outside bankruptcy and (ii) by improving the recovery rate of stakeholders, such as trade creditors, through explicit legal provisions. Consistent with these predictions, we find that when debt enforcement is stronger, financially distressed firms are less exposed to indirect distress costs in the form of reduced access to trade credit and forgone sales. We document these effects in a panel of firms from 40 countries with heterogeneous debt enforcement characteristics and in differences-in-differences tests exploiting several recent bankruptcy reforms.

Abstract. The paper reports on the formal framework to design strategies for multi-issue non-symmetric meaning negotiations among software agents in a distributed information retrieval system. The advancements of the framework are the following. A resulting strategy compares the contexts of two background domain theories not concept by concept, but the whole context (conceptual graph) to the other context by accounting the relationships among concepts, the properties and the constraints over properties. It contains the mechanisms for measuring contextual similarity through assessing propositional substitutions and to provide argumentation through generating extra contexts. It uses presuppositions for choosing the best similarity hypotheses and to make the mutual concession to common sense monotonic. It provides the means to evaluate the possible eagerness to concede through semantic commitments and related notions of knowledgeability and degree of reputation

We analyze whether growth …rms should delay current investment to hoard cash in order to reduce dilution from external …nancing. This hoarding motive is the natural counterpart to saving cash as a precaution to help secure funding for future investment opportunities. However, the two motives lead to fundamentally di¤erent implications for hoarding and for how cash interacts with key …nancial and investment decisions. In particular, our paper contributes to understanding why …rms choosing private over public …nancing hoard less, and why product market competition has an ambivalent impact on the public-private choice.

We analyze how relationship finance, such as venture capital and relationship lending, affects growth firms’ capital structure choices. We show that relationship investors that obtain a strong bargaining position because of their privileged information about the firm optimally cash in on their dominance by pushing it to finance follow-up investments with equity. The firm underinvests if its owner refuses to accept the associated dilution. However, this problem is mitigated if the firm’s initial relationship financing involves high leverage or offers initial investors preferential treatment in liquidation. By contrast, if initial investors are unlikely to gain a dominant position, firms optimally lever up only in later rounds. Our implications for relationship and venture capital financing highlight that the degree of investor dominance is of key importance for growth firms’ capital structure decisions. This paper was accepted by Gustavo Manso, finance.

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