Abstract

http://ssrn.com/abstract=2138778
 
 

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How Costly is Corporate Bankruptcy for Top Executives?


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

April 27, 2014

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 and half of all sample CEOs maintain full-time executive employment despite bankruptcy filing. For these CEOs, we estimate the median change in CEO human capital to be zero. CEOs who do not maintain full-time executive employment experience a median estimated loss of human capital equal to five times their pre-departure compensation. While CEO loss of equity investment in the bankrupt firm is large regardless of career changes, greater pre-filing equity holdings are associated with a lower likelihood of voluntary departure. Greater creditor control rights are associated with a higher likelihood of both forced departure and failure to maintain full-time executive employment.

Number of Pages in PDF File: 56

Keywords: Human capital, bankruptcy costs, CEO turnover, post-bankruptcy employment, creditor control rights

JEL Classification: G33, G34

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Date posted: August 31, 2012 ; Last revised: April 28, 2014

Suggested Citation

Eckbo, B. Espen and Thorburn, Karin S. and Wang, Wei, How Costly is Corporate Bankruptcy for Top Executives? (April 27, 2014). 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 )
Kingston, Ontario K7L 3N6
Canada

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