Renegotiation of Troubled Debt: The Choice between Discounted Payoff and Maturity Extension
研究了当贷款违约时，折价偿付和延长期限两种重新谈判方式的选择，发现延长期限能更好协调借款人和贷款人的激励，降低代理成本。
Renegotiation of securitized debt contracts is generally a more efficient solution to default than foreclosure when there are significant deadweight costs associated with the enforcement of security rights. Recent literature shows that when renegotiation takes the form of discounted loan payoffs, it eliminates deadweight costs associated with the liquidation or transfer of assets. There is evidence, however, that, in practice, renegotiation of other contract terms such as maturity is a more common form of loan workout. This observation is puzzling because, in general, maturity renegotiation does not eliminate deadweight costs. We provide a partial answer to this puzzle by showing that maturity renegotiation better aligns the incentives of borrowers and lenders than does renegotiation of principal. Specifically, we find that borrowers who expect that lenders will renegotiate maturity in the event of default have less incentive to divert cash flow from the collateral during the term of the loan and less incentive to take on additional risk. If the lender’s cost of managing these standard agency problems is positively related to the magnitude of the borrower’s incentive, then maturity renegotiation will result in lower monitoring and enforcement costs.