BD_IM_c16

BD_IM_c16 - Chapter 16 Financial Distress, Managerial...

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Chapter 16 Financial Distress, Managerial Incentives, and Information I. Chapter Outline The chapter outline below is correlated to the Premium PowerPoint Lecture Slides. The Premium PowerPoint slides are referenced in bold . Alternative Examples to selected textbook examples are available in the Premium PowerPoint Lecture Slides. Alternative Examples are referenced in bold in the chapter outline below. 16.1 Default and Bankruptcy in a Perfect Market (Slides 6–7) • Armin Industries: Leverage and the Risk of Default (Slides 8–9) – Scenario 1: New Product Succeeds (Slides 10–12) – Scenario 2: New Product Fails (Slide 13) – Comparing the Two Scenarios (Slides 14–17) • Bankruptcy and Capital Structure (Slide 18) • Example 16.1 Bankruptcy Risk and Firm Value (Slides 19–20) Premium PowerPoint Alternative Example 16.1 (Slides 21–23) 16.2 The Cost of Bankruptcy and Financial Distress (Slide 24) • The Bankruptcy Code (Slides 25–28) • Direct Costs of Bankruptcy (Slides 29–32) • Indirect Costs of Financial Distress (Slide 33) – Overall Impact of Indirect Costs 16.3 Financial Distress Costs and Firm Value (Slide 36) • Armin Industries: The Impact of Financial Distress Costs (Slides 36–39) • Example 16.2 Firm Value When Financial Distress Is Costly (Slides 40–41) Premium PowerPoint Alternative Example 16.2 (Slides 42–45) • Who Pays for Financial Distress Costs? (Slides 46–48) • Example 16.3 Financial Distress Costs and the Stock Price (Slides 49–50) 16.4 Optimal Capital Structure: The Tradeoff Theory (Slides 51–52) • Determinants of the Present Value of Financial Distress Costs (Slides 53–54) • Optimal Leverage (Slides 55–58) • Example 16.4 Choosing an Optimal Debt Level (Slides 60–61) 16.5 Exploiting Debt Holders: The Agency Costs of Leverage (Slides 62–63) • Over-investment (Slides 64–72) • Under-investment (Slides 73–78) Cashing Out (Slide 79) Agency Costs and the Value of Leverage (Slides 80–83) • Example 16.5 Agency Costs and the Amount of Leverage (Slides 84–85) • Debt Maturity and Covenants (Slides 86–87)
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60 Berk/DeMarzo • Corporate Finance 16.6 Motivating Managers: The Agency Benefits of Leverage (Slide 88) • Concentration of Ownership (Slides 89–93) • Reduction of Wasteful Investment (Slides 94–99) Excessive Perks and Corporate Scandals • Leverage and Commitment (Slide 100) 16.7 Agency Costs and the Tradeoff Theory (Slide 101) • The Optimal Debt Level (Slides 103–104) – Low-Growth, Mature Firms • Debt Levels in Practice (Slides 105–106) 16.8 Asymmetric Information and Capital Structure (Slide 107) • Leverage as a Credible Signal (Slides 108–110) • Example 16.6 Debt Signals Strength
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BD_IM_c16 - Chapter 16 Financial Distress, Managerial...

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