Learning by Doing: Evidence from Bankruptcy Judges

56 Pages Posted: 8 Dec 2017 Last revised: 13 Aug 2019

See all articles by Benjamin Charles Iverson

Benjamin Charles Iverson

Brigham Young University

Joshua Madsen

University of Minnesota - Twin Cities - Carlson School of Management

Wei Wang

Smith School of Business

Qiping Xu

University of Illinois Urbana Champaign

Date Written: March 12, 2018

Abstract

Exploiting the within-district random assignment of large corporate Chapter 11 filings, we estimate the costs of inexperience for bankruptcy judges. Inexperienced judges rule slower on motions and their cases spend more time in bankruptcy. The learning curve is approximately four years, but exposure to more corporate cases and a greater diversity of businesses accelerates judges' learning. Firms assigned to experienced judges are more likely to reorganize but not more likely to refile for bankruptcy, and their creditors have higher recovery rates. The empirical findings are robust to controlling for judge fixed characteristics and general skills. Our evidence has implications for on-the-job training for workers involved with complex tasks.

Keywords: bankruptcy judges, human capital, learning by doing, job-specific skills

JEL Classification: G33, G34, J24

Suggested Citation

Iverson, Benjamin Charles and Madsen, Joshua and Wang, Wei and Xu, Qiping, Learning by Doing: Evidence from Bankruptcy Judges (March 12, 2018). Available at SSRN: https://ssrn.com/abstract=3084318 or http://dx.doi.org/10.2139/ssrn.3084318

Benjamin Charles Iverson

Brigham Young University ( email )

United States

Joshua Madsen

University of Minnesota - Twin Cities - Carlson School of Management ( email )

19th Avenue South
Minneapolis, MN 55455
United States

Wei Wang

Smith School of Business ( email )

Queen's University-Smith School of Business
143 Union Street
Kingston, Ontario K7L 3N6
Canada

Qiping Xu (Contact Author)

University of Illinois Urbana Champaign ( email )

1206 South Sixth Street
Champaign, IL 61820
United States

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