Learning by Doing: Judge Experience and Bankruptcy Outcomes
52 Pages Posted: 8 Dec 2017 Last revised: 17 Nov 2018
Date Written: March 12, 2018
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 from the bench, and their cases spend more time in bankruptcy. Firms with inexperienced judges are less likely to reorganize and have lower debt recovery rates. The learning curve is approximately four years, but exposure to more corporate cases and a greater diversity of businesses accelerates judges' learning. The costs of inexperience are higher when courts are busy. Judges' general skill and personal attributes do not consistently explain case outcomes.
Keywords: Bankruptcy judges, human capital, learning by doing, job-specific skills
JEL Classification: G33, G34, J24
Suggested Citation: Suggested Citation