SHYAN-YUAN LEEChung, Yi FangYi FangChung2019-07-232019-07-232009-05-1502190915https://scholars.lib.ntu.edu.tw/handle/123456789/414574This paper uses differing objective functions under the Longstaff model (1990) to discuss the strategic choices faced by the creditor when deciding whether to grant maturity extension on a defaulted loan. The results reveal that: (1) it ensures that the return per unit of risk is higher after maturity extension than before; (2) it recognizes that the risk profile of the firm substantially affects the strategic behavior of the creditor; and (3) it demonstrates that the higher the profit sharing percentage the creditor get, the more willing it will be to extend maturity. © 2009 World Scientific Publishing Co. and Center for Pacific Basin Business, Economics and Finance Research.enDefaulting debt | Liquidation cost | Maturity extension decisions | Optimal extension period | Sharpe ratio[SDGs]SDG17journal article10.1142/S02190915090015752-s2.0-65549121077https://api.elsevier.com/content/abstract/scopus_id/65549121077