Informal Restructuring of Debt in Default: Theory, Evidence and Implications for Valuation and Investment Strategies
Kose John , New York University

Kose produced two papers in connection with our research contract.

The first, “The Voluntary Restructure of Large Firms in Response to Performance Decline” (with Larry Lang and Jeffry Netter) is an empirical study of voluntary corporate restructurings. The authors characterize the common elements of the restructurings. The topic is important because the recent weakening of the takeover market. This paper was published in the Journal of Finance.

The second paper, “Asset Sales and Increase in Focus” (with Eli Ofek), examines asset and stock performance following restructurings that increase the focus of the firm. The results show that such restructurings benefit the shareholders. Alternative explanations for the divestiture decisions do not seem to provide as much explanatory value as the refocusing hypothesis. (Accepted Spring 1995.)