Legal rules penalize managers more heavily for making direct statements than they do for engaging in financial signaling activity. Therefore, over time, managers will engage in more signaling activity than they would in the absence of legal regulation. It is unlikely that the law provides any...

Using an empirical analysis from Chapter 7 cases in five judicial districts, this article estimates the direct costs in typical small business Chapter 7s. The article finds that direct costs are lower than commonly portrayed, constituting a mean of 6.1% of total assets of 13.5% of total...