An employee's annual earnings fall by 10% the year her firm files for bankruptcy and fall by a present value of 67 …. Compensating wage differentials for this “bankruptcy risk” are approximately 2.3% of firm value for a firm whose credit rating … falls from AA to BBB, about the same magnitude as debt tax benefits. Thus, wage premia for expected costs of bankruptcy are …

Do leveraged buyout transactions increase the chance of bankruptcy? While corporate finance theory predicts that such … sharp changes in capital structure increase financial distress costs by raising the probability of bankruptcy for each … 10 years after going private, we find a bankruptcy rate of approximately 20%, an order of magnitude greater than the 2 …

trading off tax benefits from debt with bankruptcy costs, we analyze firms' optimal capital structure. Total firm value in the … default risk. In this case, the bankruptcy cost is zero, so there is no cost of including debt in the capital structure. All …

, the manager is dismissed, the capital structure is reorganized as in Chapter 11 bankruptcy, and the search for a new … improve its financial position. An episode of distress can end with financial recovery, transition to bankruptcy …

. Using a German bankruptcy law reform, on average, we find evidence consistent with the latter. We also hypothesize and find … reconciles the mixed empirical evidence of existing studies, but also has important implications for optimal bankruptcy design …

average, affect corporate bankruptcy rates, we find that it causes corporate bankruptcies to increase significantly for high …

An employee's annual earnings fall by 13% the year her firm files for bankruptcy, and the present value of lost … earnings from bankruptcy to six years following bankruptcy is 87% of pre-bankruptcy annual earnings. More worker earnings are … lost in thin labor markets and among small firms. Ex ante compensating wage differentials for this "bankruptcy risk" are …