Learning by Doing: Evidence from Bankruptcy Judges
54 Pages Posted: 8 Dec 2017 Last revised: 2 Feb 2020
Date Written: January 30, 2020
Exploiting the random assignment of corporate bankruptcy filings, we estimate the speed with which judges learn to manage complex corporate restructuring. Despite significant prior experience, new judges rule slower on motions and their cases spend more time in bankruptcy. Bankruptcy judges' learning curve is approximately one year for the average filing, but four years for the most complex filings. Exposure to more corporate cases and a greater diversity of businesses accelerates judges' learning. Complex filings assigned to experienced judges are more likely to reorganize but not more likely to refile for bankruptcy, and their creditors have higher recovery rates.
Keywords: bankruptcy judges, human capital, learning by doing, job-specific skills
JEL Classification: G33, G34, J24
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