TY  - JOUR
AU  - Benmelech,Efraim
AU  - Garmaise,Mark J.
AU  - Moskowitz,Tobias
TI  - Do Liquidation Values Affect Financial Contracts? Evidence from Commercial Loan Contracts and Zoning Regulation
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 11004
PY  - 2004
Y2  - December 2004
UR  - http://www.nber.org/papers/w11004
L1  - http://www.nber.org/papers/w11004.pdf
N1  - Author contact info:
Efraim Benmelech
Harvard University
Department of Economics
Littauer 233
Cambridge, MA 02138
Tel: 617/496-4787
Fax: 617/495-8570
E-Mail: effi_benmelech@harvard.edu

Mark Garmaise
Anderson Graduate School of Management
C511 Entrepreneurs Hall
110 Westwood Plaza
Los Angeles, CA 90095-1481
Tel: 310/794-4118
E-Mail: mark.garmaise@anderson.ucla.edu

Tobias J. Moskowitz
Booth School of Business
University of Chicago
5807 S. Woodlawn Ave.
Chicago, IL  60637
Tel: 773/834-2757
Fax: 773/702-0458
E-Mail: tobias.moskowitz@chicagobooth.edu
AB  - We examine the impact of asset liquidation value on debt contracting using a unique set of commercial property non-recourse loan contracts. We employ commercial zoning regulation to capture the flexibility of a property's permitted uses as a measure of an asset's redeployability or value in its next best use. Within a census tract, more redeployable assets receive larger loans with longer maturities and durations, lower interest rates, and fewer creditors, controlling for the current value of the property, its type, and neighborhood. These results are consistent with incomplete contracting and transaction cost theories of liquidation value and financial structure.
ER  -