When is Bankruptcy Threat Bad News? Risk and Return Analysis of Firms Announcing Bankruptcy in the US and Germany
ثبت نشده
چکیده
This empirical study analyzes the value destruction in US and German firms prior and around their bankruptcy announcement and makes a matched sample comparison between the two bankruptcy codes. The dataset consists of 1160 US and 116 German firms, having filed for bankruptcy between 1999 and 2007. Different market and balance sheet based data are used to explain the divergent stock reaction around the bankruptcy announcement. The event study, regression results, and the matched sample comparison show that equity holders do not necessarily fare better under a debtor friendly procedure. Not only do they suffer more often from bankruptcy announcements, but they also lose more and accumulate these losses faster than their German counterparts. Importantly, the results suggest larger value destruction in the USA due to agency and bankruptcy costs.
منابع مشابه
Bankruptcy Prediction: Dynamic Geometric Genetic Programming (DGGP) Approach
In this paper, a new Dynamic Geometric Genetic Programming (DGGP) technique is applied to empirical analysis of financial ratios and bankruptcy prediction. Financial ratios are indeed desirable for prediction of corporate bankruptcy and identification of firms’ impending failure for investors, creditors, borrowing firms, and governments. By the time, several methods have been attempted in...
متن کاملThe Prediction Model for Bankruptcy Risk by Bayesian Method
The importance of predicting bankruptcy risk of firms is increasing because of later financial crisis. Despite practical researchers trying to present models for predicting this risk, it seems that an optimum and acceptable model that is reliable for financial statement users and auditors in order to increase their ability in decision making and professional judgment has not been presented yet....
متن کاملEarnings Management and the Effect of Earnings Quality in Relation to Bankruptcy Level (Firms Listed at the Tehran Stock Exchange)
This paper investigates the relationship between earnings management and quality of earnings for the bankrupt and non-bankrupt firms listed in the Tehran Stock Exchange from 2007 to 2012.The earnings quality is measured by four separate accounting-based earnings attributes: accruals quality, earnings persistence, earnings predictability; earnings and is also examined by testing the relationshi...
متن کاملEstimation of Bankruptcy Immunity in Government and Private Banks of Iran (Duration Models Approach)
In the wake of recent financial crisis, large banks have been considered as important factors in financial markets in the world, since these bankschr(chr(chr(chr('39')39chr('39'))39chr(chr('39')39chr('39')))39chr(chr(chr('39')39chr('39'))39chr(chr('39')39chr('39')))) failure could affect the whole economy by extending systemic risk. With regard to this issue, when large banks face insolvency or...
متن کاملContagion and competitive effects of plan confirmation of reorganization filings: Evidence from the Taiwan Stock Market
a r t i c l e i n f o This paper aims to examine the intra-industry effects of confirmation of a reorganization plan. Using unique Taiwanese data on announcements of reorganization confirmation, I find evidence that such announcements elicit positive stock price reactions for the announcing firms and negative stock price reactions for other firms within the same industry. Specifically, negative...
متن کامل