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An Analysis of the Bankruptcy Reorganization Procedure in China

Author

Listed:
  • Fei Leng

    (University of Washington, Tacoma, Milgard School of Business, 1900 Commerce Street, Tacoma, WA 98402, United States)

Abstract

This paper analyzes the reorganization procedure introduced into the Chinese bankruptcy system in 2007. It shows that managers devote more effort during the reorganization than before the bankruptcy when the emergence value of the bankrupt firm is substantial. In addition, in the pre-bankruptcy period, managers were shown to input less effort under the new law than under the old law. Finally, the paper demonstrates that the market interest rate under the new bankruptcy law is not necessarily lower than that under the old law. These results call attention to the potential costs of the reorganization procedure.

Suggested Citation

  • Fei Leng, 2013. "An Analysis of the Bankruptcy Reorganization Procedure in China," Review of Pacific Basin Financial Markets and Policies (RPBFMP), World Scientific Publishing Co. Pte. Ltd., vol. 16(01), pages 1-32.
    • Handle: RePEc:wsi:rpbfmp:v:16:y:2013:i:01:n:s0219091513500057
    DOI: 10.1142/S0219091513500057
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    More about this item

    Keywords

    Chinese bankruptcy reform; bankruptcy; reorganization; liquidation;
    All these keywords.

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • G2 - Financial Economics - - Financial Institutions and Services
    • G3 - Financial Economics - - Corporate Finance and Governance

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