Learning by Doing: Judge Experience and Bankruptcy Outcomes

52 Pages Posted: 8 Dec 2017 Last revised: 17 Nov 2018

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 Notre Dame - Department of Finance

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 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

Iverson, Benjamin Charles and Madsen, Joshua and Wang, Wei and Xu, Qiping, Learning by Doing: Judge Experience and Bankruptcy Outcomes (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 )

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

Qiping Xu (Contact Author)

University of Notre Dame - Department of Finance ( email )

Mendoza College of Business
Notre Dame, IN 46556-0399
United States

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