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A Re–examination of the Effectiveness of the Bankruptcy Process

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  • Harlan D. Platt
  • Marjorie B. Platt

Abstract

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.

Suggested Citation

  • Harlan D. Platt & Marjorie B. Platt, 2002. "A Re–examination of the Effectiveness of the Bankruptcy Process," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 29(9‐10), pages 1209-1237.
    • Handle: RePEc:bla:jbfnac:v:29:y:2002:i:9-10:p:1209-1237
    DOI: 10.1111/1468-5957.00467
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    Cited by:

    1. Charitou, Andreas & Lambertides, Neophytos & Trigeorgis, Lenos, 2007. "Managerial discretion in distressed firms," The British Accounting Review, Elsevier, vol. 39(4), pages 323-346.
    2. Jaka Cepec & Peter Grajzl, 0. "Management turnover, ownership change, and post-bankruptcy failure of small businesses," Small Business Economics, Springer, vol. 0, pages 1-27.
    3. Mao-Wei Hung & Wen-Hsin Tsai, 2020. "Managerial optimism, CEO retention, and corporate performance: evidence from bankruptcy-filing firms," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 44(3), pages 506-527, July.

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