The reaction of stock prices to bankruptcy filing has been frequently analysed in the financial literature. In this paper we adopt a different approach to that of traditional study, and endeavour to determine whether the reaction of markets is conditioned by the orientation of bankruptcy law....

In this paper, we argue that the observed optimism in analysts' forecasts of earnings is related to the costs and benefits to analysts of issuing optimistic forecasts — when the costs of issuing an optimistic forecast are high relative to the benefits of doing so, optimism will be less...