RT Journal Article SR Electronic T1 Explaining Debt Recovery Using an Endogenous Bankruptcy Model JF The Journal of Fixed Income FD Institutional Investor Journals SP 114 OP 131 DO 10.3905/jfi.2013.23.2.114 VO 23 IS 2 A1 Wulin Suo A1 Wei Wang A1 Amber Qi Zhang YR 2013 UL https://pm-research.com/content/23/2/114.abstract AB Drawing on a large sample of defaulted corporate debt from 1996 to 2007, the authors find that the debt recovery estimated using the Leland–Toft endogenous bankruptcy model has strong explanatory power on the debt recovery observed in the market. Their results hold after firm characteristics, industry distress, and macroeconomic conditions are taken into account. In addition, they find that both agency problems and heterogeneous bankruptcy costs weaken the explanatory power of the model. The study suggests that structural models that incorporate the role of managers in endogenously determining the bankruptcy boundary provide statistical power in explaining the cross-sectional variation of corporate debt recovery.TOPICS: Fixed income and structured finance, credit risk management, quantitative methods