The Choice Between Reorganization and Deferred Payment for Troubled Business

• Main Author: 蔡佩欣
• Other Authors: 王智賢
• Format: Others
• Language: zh-TW
• Published: 2008
• Online Access: http://ndltd.ncl.edu.tw/handle/31618250935965770565

碩士 === 國立政治大學 === 財政研究所 === 96 === Through the free competition of the market and the highly development of capitalism, a solid and sound bankruptcy system is a crucial pillar to sustain the stability of economy and to preclude the financial market from serious crash as well. In practice, usually a firm in financial distress would negotiate with banks an informal arrangement of deferred payment rather than go into a formal bankruptcy process directly. In this paper we focus our study on small firms and set up two systems by means of building model of game theory. Furthermore, we utilize backward induction, which starts from the last period, to obtain the solution. More specifically speaking, we discuss the optimal strategy for distressed firms choosing between a debt negotiation in which the payment date is postponed for one period and going bankruptcy.