Abstract

http://ssrn.com/abstract=2138778
 
 

Citations (5)



 


 



How Costly Is Corporate Bankruptcy for the CEO?


B. Espen Eckbo


Dartmouth College - Tuck School of Business; European Corporate Governance Institute (ECGI)

Karin S. Thorburn


Norwegian School of Economics; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI)

Wei Wang


Queen's School of Business; HKUST

January 30, 2015

Tuck School of Business Working Paper No. 2012-109

Abstract:     
We examine CEO career and human capital changes around Chapter 11 bankruptcy filings for a large sample of publicly traded firms. One-third of the incumbent CEOs maintain full-time executive employment, with an estimated median compensation change of zero. The remaining two-thirds incumbents face a median present value income loss until age 65 equal to five times their pre-departure income. Incumbents who depart without a new executive position are significantly better compensated than their incoming replacements. Greater creditor control rights in bankruptcy are associated with a higher likelihood of both forced departure and failure to maintain full-time executive employment. Incumbents who stay on until filing tend not to reduce their stock holdings despite large equity losses.

Number of Pages in PDF File: 49

Keywords: CEO human capital, personal bankruptcy costs, turnover, career change, incentive-based pay, wealth loss, creditor control rights

JEL Classification: G33, G34, M12


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Date posted: August 31, 2012 ; Last revised: February 1, 2015

Suggested Citation

Eckbo, B. Espen and Thorburn, Karin S. and Wang, Wei, How Costly Is Corporate Bankruptcy for the CEO? (January 30, 2015). Tuck School of Business Working Paper No. 2012-109. Available at SSRN: http://ssrn.com/abstract=2138778 or http://dx.doi.org/10.2139/ssrn.2138778

Contact Information

B. Espen Eckbo (Contact Author)
Dartmouth College - Tuck School of Business ( email )
Hanover, NH 03755
United States
603-646-3953 (Phone)
603-646-3805 (Fax)
HOME PAGE: http://www.tuck.dartmouth.edu/eckbo
European Corporate Governance Institute (ECGI)
c/o ECARES ULB CP 114
B-1050 Brussels
Belgium
Karin S. Thorburn
Norwegian School of Economics ( email )
Helleveien 30
N-5045 Bergen
Norway
+4755959283 (Phone)
HOME PAGE: http://www.nhh.no/cv/thorburn
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
European Corporate Governance Institute (ECGI)
c/o ECARES ULB CP 114
B-1050 Brussels
Belgium
HOME PAGE: http://www.ecgi.org
Wei Wang
Queen's School of Business ( email )
143 Union Street
Kingston, Ontario K7L 3N6
Canada

HKUST ( email )
Clearwater Bay
Kowloon
Hong Kong
Feedback to SSRN


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