A Re-examination of the Effectiveness of the Bankruptcy Process


As an increasing number of companies go bankrupt, society grows concerned with the process's efficacy. In contrast to previous research, we find that relatively healthy companies emerge from bankruptcy as evidenced by their operating and equity performance post bankruptcy. While we find a substantial degree of variation in the forecast accuracy of sales, EBIT and net income, we find that forecast errors are not statistically significant and are smaller than had been thought. We provide evidence to support the argument that the economy's health affects operating and equity outcomes post bankruptcy. Copyright Blackwell Publishers Ltd 2002.

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Research Papers in Economics

Last time updated on 06/07/2012

This paper was published in Research Papers in Economics.

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