A Simple Test of Adverse Events and Strategic Timing Theories of Consumer Bankruptcy / Li Gan, Tarun Sabarwal.

Format:

Book

Author/Creator:

Gan, Li.

Contributor:

National Bureau of Economic Research.

Sabarwal, Tarun.

Series:

Working Paper Series (National Bureau of Economic Research) no. w11763.

NBER working paper series no. w11763

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2005.

Summary:

A test of adverse events and strategic timing theories can be conducted by determining whether some relevant financial decision variables, such as financial benefit from filing for bankruptcy, or debt discharged in bankruptcy are endogenous with the bankruptcy decision or not. For the strategic timing theory such decisions are endogenous, while for the adverse events theory they are not. Hausman tests for endogeneity show that financial benefit, unsecured debt, and non-exempt assets are exogenous with the bankruptcy decision, consistent with the adverse events theory.

Notes:

Print version record

November 2005.