Postbankruptcy Performance and Management Turnover.
This article examines the performance of 197 public companies that emerged from Chapter 11. Over 40 percent of the sample firms continue to experience operating losses in the three years following bankruptcy; 32 percent reenter bankruptcy or privately restructure their debt. The continued involvement of prebankruptcy management in the restructuring process is strongly associated with poor postbankruptcy performance. The substantial number of firms emerging from Chapter 11 that are not viable or need further restructuring provides little evidence that the process effectively rehabilitates distressed firms and is consistent with the view that there are economically important biases toward continuation of unprofitable firms. Copyright 1995 by American Finance Association.
Year of publication: |
1995
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Authors: | Hotchkiss, Edith Shwalb |
Published in: |
Journal of Finance. - American Finance Association - AFA, ISSN 1540-6261. - Vol. 50.1995, 1, p. 3-21
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Publisher: |
American Finance Association - AFA |
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