Endogenous Bankruptcy and Expected Recovery
نویسندگان
چکیده
Using a large sample of Chapter 11 filings from 1996 to 2007 we find that the endogenously determined expected recovery derived from Leland and Toft (1996) has strong explanatory power on debt recovery observed in the market. Our results hold after firm characteristics, industry distress, and macroeconomic conditions are accounted for. In addition, we find that agency conflicts and ex post bankruptcy costs both contribute to the explanatory power of expected recovery on market recovery.
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