Karsten MüllerPhD Candidate, University of Warwick
I study the allocation of capital from a banking, corporate finance, and macroeconomic perspective.
Do Firms Pledge Their Pledgeable Assets? (with Jan Keil)
Pledgeable assets with higher liquidation values are often thought to increase debt capacity by being collateralized in loan contracts. Contrary to this intuition, we find that higher liquidation values are associated with less collateralization, using plausibly exogenous shocks to local real estate markets as quasi-experiments. We argue that creditors require collateral to compensate for shortfalls in expected liquidation proceeds due to low asset redeployability or competing claims. Consistent with this idea, we find evidence that collateralization is more likely when a firm has other secured creditors and that liquidation values decrease super senior claims.
WORK IN PROGRESS
The Structure of Credit Markets