Asset liquidity , debt covenants , and managerial discretion in financial distress : the collapse of L . A . Gear

@inproceedings{DeAngeloa2002AssetL,
  title={Asset liquidity , debt covenants , and managerial discretion in financial distress : the collapse of L . A . Gear},
  author={Harry DeAngeloa and Linda DeAngeloa and Karen H. Wruckb},
  year={2002}
}
  • Harry DeAngeloa, Linda DeAngeloa, Karen H. Wruckb
  • Published 2002
A hot growth stock in the 1980s, L.A. Gear’s equity fell from $1 billion in market value in 1989 to zero in 1998. For over six years as revenues declined precipitously, management tried a series of radical strategy shifts while subsidizing the firm’s large losses through working-capital liquidations. The L.A. Gear case illustrates that asset liquidity (broadly construed, not limited to excess cash) can give managers substantial operating discretion during financial distress. It also shows (1… CONTINUE READING
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