Resolution of Corporate Financial Distress:An Empirical Analysis of Processes and Outcomes

Causes and resolution of bankruptcy: The efficiency of the law

“…The studies about bankruptcy resolution (e.g., White, 1984;Campbell, 1996;Bryan et al, 2002Bryan et al, , 2010Jacobs et al, 2012) analyze whether the accounting information before the initiation of bankruptcy is associated with the resolution. In this line, some authors (White, 1994;Blazy and Chopard, 2004;Lemmon et al, 2009;Fischer and Wahrenburgh, 2012) have tried to demonstrate whether the resolution of bankruptcy is related to its causes.…”

“…The reason is that creditors will be more willing to trust information regarding the firm's viability, and the creditors' probability of recovering the debt depends on that information. The size is estimated by the total assets logarithm (Ayotte and Morrison, 2009;Jacobs et al, 2012).…”

“…Several reasons support counting on legislation to regulate bankruptcy proceedings: the impossibility of creditors designing individual processes to recover from debtors (because the contracts are incomplete) (Hart, 2000); the reallocation of assets to better use (Jacobs et al, 2012); and the search for temporary protection by creditors from managers/shareholders with the aim of solving their liquidity problems or looking for a purchaser for the firm's assets (Baird and Rasmussen, 2002). In this sense, bankruptcy legislation should provide a framework that allows economically viable firms to reorganize and continue their business activities and simultaneously forces inefficient firms to be liquidated.…”

Integrity of financial information as a determinant of the outcome of a bankruptcy procedure

“…*** A coefficient is statistically significant at the 1% level or better. Hotchkiss, 1995;Jacobs, Karagozoglu, & Layish, 2012;LoPucki, 1983). Table 4 reports the estimation of the regression model that considers only the sample of bankrupt companies and investigates earnings management practices comparing firms ending the bankruptcy procedure with a 'liquidation' decision and other bankrupt companies that received a 'reorganisation' decision.…”

Post-acquisition profitability of banks: a comparison of domestic and cross-border acquisitions in the European Union

“…Such long-term performance will include the returns to investors, dividend payout, and the stock price subsequent to the merger deal. Jacobs et al (2012) used several accounting and economic measures in estimating the performance of large firms with low cumulative abnormal returns on equity.…”