Asset Allocation in Bankruptcy / Shai Bernstein, Emanuele Colonnelli, Ben Iverson.

Format:

Book

Author/Creator:

Bernstein, Shai.

Contributor:

National Bureau of Economic Research.

Colonnelli, Emanuele.

Iverson, Ben.

Series:

Working Paper Series (National Bureau of Economic Research) no. w23305.

NBER working paper series no. w23305

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2017.

Summary:

This paper investigates the consequences of liquidation and reorganization on the allocation and subsequent utilization of assets in bankruptcy. Using the random assignment of judges to bankruptcy cases as a natural experiment that forces some firms into liquidation, we find that the long-run utilization of assets of liquidated firms is lower relative to assets of reorganized firms. These effects are concentrated in thin markets with few potential users, and in areas with low access to finance. The results highlight the importance of local search frictions and financial frictions in affecting the allocation of assets in bankruptcy.

Notes:

Print version record

March 2017.