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The Costs of Bankruptcy

Author

Listed:
  • Arturo Bris
  • Ivo Welch
  • Ning Zhu

Abstract

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.

Suggested Citation

  • Arturo Bris & Ivo Welch & Ning Zhu, 2005. "The Costs of Bankruptcy," Yale School of Management Working Papers amz2375, Yale School of Management, revised 21 Sep 2009.
    • Handle: RePEc:ysm:wpaper:amz2375
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    File URL: https://repec.som.yale.edu/icfpub/publications/2375.pdf
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    References listed on IDEAS

    as
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    More about this item

    JEL classification:

    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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