Empirical Estimates of Filtering Failure in Court-Supervized Reorganization

25 Pages Posted: 15 Dec 1999

See all articles by Jocelyn Martel

Jocelyn Martel

ESSEC Business School

Timothy C. G. Fisher

Wilfrid Laurier University

Date Written: August 1999

Abstract

We present the first comprehensive empirical estimates of filtering failure in a bankruptcy system. Using a sample of 303 firms attempting reorganization in Canada during 1977-88, we find that Type I errors (accepting a plan from a non-viable firm) are 4 times more likely to occur than Type II errors (rejecting a plan from a viable firm) and that the incidence of filtering failure is between 22 and 53 percent. Preliminary estimates using Jensen-Conklin data indicate that filtering failure under Chapter 11 is much higher than under Canadian law, and, interestingly, that Type II errors are much more likely than Type I errors in Chapter 11.

JEL Classification: G33, G38

Suggested Citation

Martel, Jocelyn and Fisher, Timothy, Empirical Estimates of Filtering Failure in Court-Supervized Reorganization (August 1999). Available at SSRN: https://ssrn.com/abstract=181477 or http://dx.doi.org/10.2139/ssrn.181477

Jocelyn Martel

ESSEC Business School ( email )

Avenue Bernard Hirsch B.P. 50105
Cergy-Pontoise, 95021
France
33 1 34 43 33 21 (Phone)

Timothy Fisher (Contact Author)

Wilfrid Laurier University ( email )

Economics
Waterloo, Ontario N2L 3C5
Canada
519-884-0710 (2671) (Phone)
519-888-1015 (Fax)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
109
Abstract Views
792
rank
310,543
PlumX Metrics