Post-Bankruptcy Performance and Management Turnover

Posted: 4 May 2000

See all articles by Edith S. Hotchkiss

Edith S. Hotchkiss

Boston College - Carroll School of Management


This paper examines the performance of 197 public companies which emerged from Chapter 11. Over 40% of the sample firms continue to experience operating losses in the three years following bankruptcy; 32% reenter bankruptcy or privately restructure their debt. The continued involvement of pre- bankruptcy management in the restructuring process is strongly associated with poor post-bankruptcy performance. The substantial number of firms emerging from Chapter 11 which are not viable or need further restructuring provides little evidence that the process effectively rehabilitates distressed firms, and is consistent with the view that there are economically important biases toward continuation of unprofitable firms.

JEL Classification: G33

Suggested Citation

Hotchkiss, Edith S., Post-Bankruptcy Performance and Management Turnover. JOURNAL OF FINANCE, Vol 50, No 1, March 1995. Available at SSRN:

Edith S. Hotchkiss (Contact Author)

Boston College - Carroll School of Management ( email )

140 Commonwealth Avenue
Department of Finance Fulton Hall, Room 330
Chestnut Hill, MA 02467
United States
617-552-3240 (Phone)
617-552-0431 (Fax)

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