We develop a structural bond valuation model to simultaneously capture liquidity and credit risk. Our model implies that renegotiation in financial distress is influenced by the illiquidity of the market for distressed debt. As default becomes more likely, the components of bond yield spreads attributable to illiquidity increase. When we consider finite maturity debt, we find decreasing and con…
Ada Tabel
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This research is aimed to analyze the influence of book-tax differences on bond ratings of PEFINDO in Indonesia for six years observation period (2003-2008) using ordinal logit regression method. Variables used to proxy book-tax differences are deferred taxes and tax-to-book ratios. The model of this research is divided into two models. Model I is aimed to analyze the influence of deferred taxe…