The influence of bankruptcy law on equity value of financially distressed firms: A European comparative analysis

Gutiérrez, Carlos López; Olalla, Myriam Garcı́a; Olmo, Begoña Torre

doi:10.1016/j.irle.2009.02.002

Cited by 7 publications

(9 citation statements)

References 33 publications

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“…Traditionally, bankruptcy laws have followed two possible orientations: debtor‐oriented systems, as in Chapter 11 of the United States Bankruptcy Code; or creditor‐oriented systems, whose paradigmatic example is the receivership in the United Kingdom (Franks et al. , 1996; Kaiser, 1996; Franken, 2004; Davydenko and Franks, 2008; López Gutiérrez et al. , 2009).…”

Section: Theoretical Background and Hypothesesmentioning

confidence: 99%

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Firms’ performance under different bankruptcy systems: a Europe–USA empirical analysis

Gutiérrez

Olmo

Azofra

2011

Accounting & Finance

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This study empirically analyses the effect that the bankruptcy law has on firms' performance based on its financial situation. To do this, we considered the different types of efficiency and their influence on firms' value. The study was carried out for Germany, Spain, the United States, France and the United Kingdom. We applied System-GMM estimation to dynamic panel data. The main results show that under creditor-oriented systems, there is a decrease in the value of both financially distressed firms and those filing for bankruptcy.

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Section: Theoretical Background and Hypothesesmentioning

confidence: 99%

“…Intermediate ratings were established for those characteristics that require them so that the index reflects the differences between the regulations as precisely as possible (Pistor et al. , 2000; López Gutiérrez et al. , 2009).…”

Section: Bankruptcy Law Orientationmentioning

confidence: 99%

Firms’ performance under different bankruptcy systems: a Europe–USA empirical analysis

Gutiérrez

Olmo

Azofra

2011

Accounting & Finance

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“…Furthermore, the lack of concurrence between the introduction of relaunching procedures and the Great Depression can also be explained by considering that the 1930s economic shocks probably stimulated adaptations to existing institutions rather than triggering the introduction of entirely new ones. 36 This conclusion is supported by nation-level evidence: In Belgium, for example, the Administration Contrôlé was introduced in 1934 but only for two years; in Italy special case was made for banks and insurances, but there was no reshaping of bankruptcy law overall; whereas in England, as stressed by contemporary commentators, "the … economic crises produced no basic change." 37 The benchmark years in the Golden Age (1950 and1975) are notable for their lack of changes, and this is confirmed by our data.…”

Section: Changes By Benchmark and The Introduction Of "Alternative" Pmentioning

confidence: 99%

Bankruptcy Laws Around Europe (1850–2015): Institutional Change and Institutional Features

Martino¹,

Latham²,

Vasta³

2020

Enterp. Soc.

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Despite the relevance of bankruptcy law for a number of key issues regarding business functioning and organization, little is known about the features and evolution of these legal institutions over time and space. This paper starts to fill this gap in current knowledge by analyzing a new data set providing consistent information about key features of bankruptcy law between 1850 and 2015 in the thirty largest European economies. Regarding institutional change, our analysis supports the established view of a link between macroeconomic changes and the introduction of procedures alternative to bankruptcy. However, this process shows significant differences at the national level, making it difficult to support the idea of change as the result of belonging to a given legal system (French; common law; Scandinavia; Germanic), or the degree of economic development. Instead, change in bankruptcy institutions seems to be a product of, and contributor to, the wider process of individual state formation. Similarly, the features of bankruptcy procedures seem to confirm this picture: Looking at their possible outcomes, the right to begin proceedings, and degree of application to different types of debtors, national differences appear deep and persistent, despite a generalized pattern of convergence over time toward a less punitive approach to bankruptcy. Contact Information: University of Birmingham, Birmingtonham Business School, University House, Edgbaston Park Road, Birmingham, West Midlands, B15 2TY, United Kingdom of Great Britain and Northern Ireland. E-mail: p.dimartino@bham.ac.uk

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“…Our research contributes to the bankruptcy literature as it intends to fill the gap between the economic and legal studies about bankruptcy. In many countries, such as Spain, the legal data access is difficult, and there is a dearth of economic studies involving the current law . Moreover, in our study, financial and non‐financial variables are used with current Spanish data and could help to understand the impact of the economic crisis in our firms.…”

Section: Introductionmentioning

confidence: 99%

On the Efficiency of Bankruptcy Law: Empirical Evidence in Spain

Miñano

Pascual‐Ezama

Grande

2013

Intl Insolvency Rev

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The current economic crisis is showing one of the main problems that many companies in financial distress have to face, namely, the impact of bankruptcy law in relation to companies and firms. This paper aims to analyze the bankruptcy law ex‐ante efficiency when companies are in financial distress. To test it out, two research questions are submitted: (i) Is solvency, the criterion used in the Spanish law, the best one to assess the relative significance of the main indicators, which determine bankrupt firms? (ii) Is the Spanish bankruptcy law efficient according to solvency or are there better criteria? To answer them, a logistic regression model is conducted. The sample embraces 1,387 firms in Spain, the data being obtained from 12 Commercial Justice Courts complemented with financial information. The main conclusion is that the solvency criterion is adequate to classify bankrupt companies although currently Spanish Bankruptcy law is not as efficient as it could be. Additionally, the relevant companies' indicators, which explain the financial distress procedure, are presented. Copyright © 2013 INSOL International and John Wiley & Sons, Ltd

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The influence of bankruptcy law on equity value of financially distressed firms: A European comparative analysis

Cited by 7 publications

References 33 publications

Firms’ performance under different bankruptcy systems: a Europe–USA empirical analysis

Firms’ performance under different bankruptcy systems: a Europe–USA empirical analysis

Bankruptcy Laws Around Europe (1850–2015): Institutional Change and Institutional Features

On the Efficiency of Bankruptcy Law: Empirical Evidence in Spain

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