It Takes Two to Tango: An Empirical Tale of Distressed Firms and Assisting Banks

36 Pages Posted: 27 Sep 2004

See all articles by Oscar Couwenberg

Oscar Couwenberg

University of Groningen - Faculty of Spatial Sciences

Abe de Jong

Rotterdam School of Management, Erasmus University; Monash University

Multiple version iconThere are 2 versions of this paper

Date Written: June 2004 8,

Abstract

We study the restructuring process of small and medium-sized firms in financial distress. We have a unique dataset with firms in the Netherlands that are guided in their restructuring effort by banks. Part of our dataset consists of firms that successfully restructure their operations and obligations with the help of their bank. Another part consists of firms that, despite the assistance of their bank, did not succeed in reorganizing their operations and finances. Our empirical test predicts success and failure in restructuring. We find that banks guide firms in their restructuring effort and that their assistance is of crucial importance to the success of the restructuring. However, some firms do not benefit from this assistance, because firms need to be prepared to undertake radical operational changes before bank assistance is forthcoming.

Keywords: bankruptcy, debt restructuring, financial distress, reorganization

JEL Classification: M, M41, G3, G21, G33, K22, K33

Suggested Citation

Couwenberg, Oscar and de Jong, Abe, It Takes Two to Tango: An Empirical Tale of Distressed Firms and Assisting Banks (June 2004 8,). ERIM Report Series Reference No. ERS-2004-049-F&A. Available at SSRN: https://ssrn.com/abstract=594986

Oscar Couwenberg (Contact Author)

University of Groningen - Faculty of Spatial Sciences ( email )

P.O. Box 800
9700 AV Groningen
Netherlands
31 50 363 3907 (Phone)

HOME PAGE: http://www.rug.nl/staff/o.couwenberg/?lang=en

Abe De Jong

Rotterdam School of Management, Erasmus University ( email )

P.O. Box 1738
Room T08-25
Rotterdam, 3000 DR
Netherlands
+31 10 408 1022 (Phone)

HOME PAGE: http://https://www.rsm.nl/people/abe-de-jong/

Monash University ( email )

900 Dandenong Rd
Room H3-56
Caulfield East, Victoria 3145
Australia

HOME PAGE: http://https://research.monash.edu/en/persons/abe-de-jong

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