81 Pages Posted: 7 Dec 2005
Our paper explores a comprehensive sample of small and large corporate bankruptcies in Arizona and New York from 1995-2001. We find that bankruptcy costs are very heterogeneous and sensitive to measurement method. Still, Chapter 7 liquidations appear no faster or cheaper (in terms of direct expense) than Chapter 11 bankruptcies. But Chapter 11 seems to preserve assets better, and thereby allows creditors to recover relatively more. Our paper also provides a large number of further empirical regularities.
JEL Classification: G33, K22, G28
Suggested Citation: Suggested Citation
Bris, Arturo and Welch, Ivo and Zhu, Ning, The Costs of Bankruptcy. Journal of Finance, Forthcoming; Yale ICF Working Paper No. 04-13; AFA 2005 Philadelphia Meetings Paper. Available at SSRN: https://ssrn.com/abstract=868568