China's insolvency regime has been in a state of transition for a relatively long period of time, although a new … procedures discussed in this paper. It is likely that the pre-existing approaches to dealing with insolvency in China will also …

We estimate the costs of financial distress prior to default (pre-default costs) separately from the loss incurred at … default (the loss given default) using a dynamic trade-off model of capital structure. We document that pre-default costs are … on average equal to 6.5% of firm value per year. We show that pre-default costs account for a large fraction of total …

, we find that both agency problems and heterogeneous bankruptcy costs weaken the explanatory power of the model. Our study …