The long-run performance of firms emerging from Chapter 11 bankruptcy
The long-run performance of firms emerging from Chapter 11 bankruptcy
In this article, we assess the stock price performance of 184 firms emerging from Chapter 11 bankruptcy between 1980 and 2006. We find their mean post-bankruptcy performance to be similar to the performance of their size and-book-to-market control firms, as well as to the performance of their respective New York Stock Exchange–American Stock Exchange (NYSE–AMEX) beta decile-portfolio. We also analyse the effects of the bankruptcy process, new equity ownership and Chief Executive Officer (CEO) changes on the stock price performance of firms that emerged from Chapter 11. We find that being incorporated in the state of Delaware, the bankruptcy duration, a prepackaged bankruptcy, and the proportion of equity retained by the pre-Chapter 11 shareholders positively influence stock price performance. We also find that filing Chapter 11 with the Delaware Bankruptcy District Court, a change in the company's name, equity ownership by management, and the experience of the new CEO leading the firm out of bankruptcy do not lead to improved performance post-bankruptcy
1145-1161
Jory, Surendranath
2624eb24-850a-48f6-b3c6-c96749b87322
Madura, Jeff
d0a58acb-8d61-4120-b6d6-e091c1daf6c4
June 2010
Jory, Surendranath
2624eb24-850a-48f6-b3c6-c96749b87322
Madura, Jeff
d0a58acb-8d61-4120-b6d6-e091c1daf6c4
Jory, Surendranath and Madura, Jeff
(2010)
The long-run performance of firms emerging from Chapter 11 bankruptcy.
Applied Financial Economics, 20 (14), .
(doi:10.1080/09603101003761895).
Abstract
In this article, we assess the stock price performance of 184 firms emerging from Chapter 11 bankruptcy between 1980 and 2006. We find their mean post-bankruptcy performance to be similar to the performance of their size and-book-to-market control firms, as well as to the performance of their respective New York Stock Exchange–American Stock Exchange (NYSE–AMEX) beta decile-portfolio. We also analyse the effects of the bankruptcy process, new equity ownership and Chief Executive Officer (CEO) changes on the stock price performance of firms that emerged from Chapter 11. We find that being incorporated in the state of Delaware, the bankruptcy duration, a prepackaged bankruptcy, and the proportion of equity retained by the pre-Chapter 11 shareholders positively influence stock price performance. We also find that filing Chapter 11 with the Delaware Bankruptcy District Court, a change in the company's name, equity ownership by management, and the experience of the new CEO leading the firm out of bankruptcy do not lead to improved performance post-bankruptcy
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Published date: June 2010
Organisations:
Southampton Business School
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Local EPrints ID: 394334
URI: http://eprints.soton.ac.uk/id/eprint/394334
ISSN: 0960-3107
PURE UUID: 9a467e98-4e9d-420c-b4a0-91b83f39288c
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Date deposited: 13 May 2016 09:05
Last modified: 15 Mar 2024 03:45
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Author:
Jeff Madura
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