Li, Yuanzhi; Zhong, Zhaodong - In: Journal of Financial Markets 16 (2013) 1, pp. 33-60
We address questions about Chapter 11 stocks regarding their trading environment, fundamental value, and performance …. First, there exists active trading for Chapter 11 stocks throughout the bankruptcy process. Second, equity value after …-linearity similar to out-of-money call options. Third, investing in Chapter 11 stocks incurs large losses. Consistent with heterogeneous …