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From courtrooms to corporations: The effect of bankruptcy court establishment on firm acquisitions

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  • Rehman, Obaid Ur
  • Zhou, Zihan
  • Wu, Kai
  • Li, Wen

Abstract

We examine the impact of bankruptcy court establishment (BCE) on corporate acquisition activities using hand-collected data of city-level BCE in China from 2008 to 2020. The results show that BCE promotes corporate acquisition activities largely due to mitigated information asymmetry and decreased deal inefficiency. Our results highlight the important role of judiciary reform in corporate acquisition decisions in emerging markets.

Suggested Citation

  • Rehman, Obaid Ur & Zhou, Zihan & Wu, Kai & Li, Wen, 2024. "From courtrooms to corporations: The effect of bankruptcy court establishment on firm acquisitions," Finance Research Letters, Elsevier, vol. 61(C).
    • Handle: RePEc:eee:finlet:v:61:y:2024:i:c:s1544612324000679
    DOI: 10.1016/j.frl.2024.105037
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    References listed on IDEAS

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    More about this item

    Keywords

    Bankruptcy court; Judiciary reform; Firm acquisition;
    All these keywords.

    JEL classification:

    • K4 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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