Toward a New Corporate Reorganization Paradigm
Donald Bernstein
This article argues that the increased trading of distressed corporate debt by active investors can be expected to increase creditor recoveries while moving corporate assets quickly to their highest-valued uses and most efficient users. But, in many cases, accomplishing this goal will require investors to find ways to manage relatively new “inter-creditor” conflicts stemming from the use of junior secured debt and the dispersion of claims in CDOs and CLOs.

Morgan Stanley Roundtable on Managing Financial Trouble
Panelists: Edward Altman, Douglas Baird, Donald Bernstein, Steve Gidumal, Gary Hindes, and Max Holmes. Moderated by Don Chew.
Bankruptcy academics and practitioners explore the extent to which the new, market-driven reorganization process is responsible for today's historically low default rates, and speculate on its likely effect during a future downturn in the economy. The dominant theme is the ingenuity of today's distressed investors in finding ways to keep viable, but financially distressed companies out of bankruptcy when possible-while making the most of the advantages of the new streamlined Chapter 11 when not.

Private Equity: Boom and Bust?
Viral Acharya, Julian Franks, and Henri Servaes
This article focuses on the role of debt syndication, in the form of CDOs and CLOs, in contributing to the high prices and leverage in the recent wave of private equity transactions. The authors' principal concern is that lack of information about who holds the debt could exacerbate the effect of a shock to the LBO sector on the liquidity of financial institutions generally. The main policy prescription is increased disclosure of such holdings.

Financial Economists Roundtable Statement on the International Competitiveness of U.S. Capital Markets
Franklin Edwards and Kenneth Scott
Recent reports by the Committee on Capital Markets Regulation and McKinsey & Co. concluded that the U.S.'s position as the leading financial center was being challenged by foreign markets. In July 2007, the Financial Economists Roundtable responded with its own report. This report made four policy recommendations covering securities class action lawsuits, shareholder rights, compliance costs associated with SOX §404 and maintaining open markets.

What Companies Need to Know About International Cross-Listing
Michael R. King and Usha R. Mittoo
This article addresses a number of issues about cross-listing by non-U.S. companies on a U.S. stock exchange. Managerial surveys and academic research show that companies cross-list to increase visibility and share liquidity, to broaden their shareholder base, to gain access to cheaper financing and reduce the cost of capital, and, in some cases, to implement a global business strategy.

Ten Common Misconceptions about Enterprise Risk Management
John Fraser and Betty Simkins
A well-designed and carefully executed ERM program can increase firm value by strengthening investors' confidence in management's ability to carry out its business plan. The authors begin by arguing that few companies have made substantial progress in establishing truly enterprise-wide systems. The authors correct what they take to be the 10 most common corporate misconceptions that now stand in the way of effective applications of ERM.

Choices and Best Practice in Corporate Risk Management Disclosure
Ekaterina Emm, Gerald Gay, and Chen-Miao Lin
The SEC requires corporations to disclose the nature and extent of their risk exposures using one or more of the following three methods: (1) sensitivity analysis; (2) the “tabular” format; and (3) value-at-risk (VaR). This article discusses the significant differences in the type and level of information revealed by each method and examines how corporate choices of disclosure method vary with firm-specific and industry characteristics.

How Banks Price Loans to Public-Private Partnerships: Evidence from European Markets
Frederic Blanc-Brude and Roger Strange
Public-private partnerships are project finance transactions in which project output is a function of government policy in fields such as health, transport, and education. This article finds that the main driver of credit spreads in these loans is market risk, while technical risks appear to be diversified “away.” Most important, loan size, maturity, and leverage do not show up as significant determinants of the cost of debt in PPPs.

Euro Membership as a Real Option Trigger: An Empirical Study of EU15 Manufacturing Firms
Tom Aabo and Christos Pantzalis
This article examines how the introduction of the Euro affected manufacturing firms in the 15 EU countries prior to its 2004 expansion. The study's main finding is that companies based in one of the 12 Euro-adopting countries were more inclined to exercise various forms of real options such as establishing alliances or partnerships, entering new markets, switching suppliers, or otherwise expanding within the Euro-area.

Lessons from the Financial Crisis of 1907
Robert Bruner and Sean Carr
The credit crisis of 2007 has some remarkable similarities to, but also important differences from, the panic and crash of 1907. This article revisits that episode, describing the convergence of market forces that caused investors to react with alarm and the collective response to the crisis by J.P. Morgan and the New York financial community.