Corporate Bankruptcy Reorganizations: Estimates from a Bargaining Model

23 Pages Posted: 8 May 2008

Multiple version iconThere are 2 versions of this paper

Date Written: 2006-09

Abstract

This article uses a novel approach to measure the unobserved liquidation value of a firm that relies on the information contained in the allocations that are agreed upon in Chapter 11 negotiations. I estimate a game theoretic model that captures the influence of liquidation value on the equilibrium allocations using a newly collected data set. I find that the liquidation values are higher when the industry conditions are more favorable, and the real interest rates are higher. I use the estimated model to conduct a counterfactual experiment to quantitatively assess the impact of a mandatory liquidation on the equilibrium allocations.

Suggested Citation

Eraslan, Hulya, Corporate Bankruptcy Reorganizations: Estimates from a Bargaining Model (2006-09). International Economic Review, Vol. 49, Issue 2, pp. 659-681, May 2008, Available at SSRN: https://ssrn.com/abstract=1130543 or http://dx.doi.org/10.1111/j.1468-2354.2008.00493.x

Hulya Eraslan (Contact Author)

Rice University ( email )

Department of Economics MS-22
Rice University P.O Box 1892
Houston, TX Texas 77251-1892
United States
7133483453 (Phone)

HOME PAGE: http://he6.web.rice.edu/

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