Does size matter? Examining the probability of firm emergence from bankruptcy

Abstract

We examine the association between firm size and the likelihood of emergence from bankruptcy filed under Chapter 11. Using 715 firm‐year observations from 1979 to 2019, we find that large firms are less likely to emerge. We use performance, financial constraints, and information environment as potential channels to examine the mechanism by which firm size affects the likelihood of firm emergence from bankruptcy. Further analysis shows that the likelihood of bankruptcy emergence is lower for large firms before the global financial crisis of 2007.