Abstract

http://ssrn.com/abstract=956929
 
 

References (38)



 
 

Citations (18)



 


 



Is Chapter 11 Costly?


Avner Kalay


Tel Aviv University - Faculty of Management; University of Utah - David Eccles School of Business

Rajeev Singhal


Oakland University

Elizabeth Tashjian


University of Utah - Department of Finance


Journal of Financial Economics (JFE), Forthcoming

Abstract:     
We examine a sample of 459 firms filing for Chapter 11 during the period 1991 to 1998 and find that our sample firms experience significant improvements in their operating performance during Chapter 11. Our evidence is consistent with the hypothesis that Chapter 11, if anything, provides net benefits to bankrupt firms. In the cross section, firms with higher debt ratios experience greater improvements in operating performance, and the complexity of the renegotiation process negatively affects the improvement. We find no relationship between Chapter 11 outcome and changes in risk-adjusted firm value in Chapter 11.

Number of Pages in PDF File: 40

Keywords: indirect bankruptcy costs, Chapter 11, bankruptcy

JEL Classification: G33

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Date posted: January 15, 2007  

Suggested Citation

Kalay, Avner and Singhal, Rajeev and Tashjian, Elizabeth, Is Chapter 11 Costly?. Journal of Financial Economics (JFE), Forthcoming. Available at SSRN: http://ssrn.com/abstract=956929

Contact Information

Avner Kalay
Tel Aviv University - Faculty of Management ( email )
P.O. Box 39010
Ramat Aviv, Tel Aviv, 69978
Israel
972 3 6406298 (Phone)
972 3 6406330 (Fax)
University of Utah - David Eccles School of Business ( email )
1645 E Campus Center Dr
Salt Lake City, UT 84112-9303
United States
801-581-5457 (Phone)
Rajeev Singhal
Oakland University ( email )
Rochester, MI 48309-4401
United States
Elizabeth Tashjian
University of Utah - Department of Finance ( email )
David Eccles School of Business
Salt Lake City, UT 84112
United States
801- 585-3212 (Phone)
801- (Fax)
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