The long-run performance of firms emerging from chapter 11 bankruptcy

Jory, S.R. and Madura, J. 2010. The long-run performance of firms emerging from chapter 11 bankruptcy. Applied Financial Economics. 20 (14), pp. 1145-1161. https://doi.org/10.1080/09603101003761895

TitleThe long-run performance of firms emerging from chapter 11 bankruptcy
AuthorsJory, S.R. and Madura, J.
Abstract

In this article, we assess the stock price performance of 184 firms emerging from Chapter 11 bankruptcy between 1980 and 2006. We find their mean post-bankruptcy performance to be similar to the performance of their size and-book-to-market control firms, as well as to the performance of their respective New York Stock Exchange-American Stock Exchange (NYSE-AMEX) beta decile-portfolio. We also analyse the effects of the bankruptcy process, new equity ownership and Chief Executive Officer (CEO) changes on the stock price performance of firms that emerged from Chapter 11. We find that being incorporated in the state of Delaware, the bankruptcy duration, a prepackaged bankruptcy, and the proportion of equity retained by the pre-Chapter 11 shareholders positively influence stock price performance. We also find that filing Chapter 11 with the Delaware Bankruptcy District Court, a change in the company's name, equity ownership by management, and the experience of the new CEO leading the firm out of bankruptcy do not lead to improved performance post-bankruptcy.

JournalApplied Financial Economics
Journal citation20 (14), pp. 1145-1161
ISSN0960-3107
YearJul 2010
PublisherTaylor & Francis
Digital Object Identifier (DOI)https://doi.org/10.1080/09603101003761895
Publication dates
PublishedJul 2010

Related outputs

Are retailers “bagging” the carrier bag levy in England? An exploratory enquiry
Jory, S.R., Benamraoui, A., Madichie, N.O., Ruiz-Alba, J. and Christodoulou, I. 2019. Are retailers “bagging” the carrier bag levy in England? An exploratory enquiry. Journal of Environmental Management. 233, pp. 845-853. https://doi.org/10.1016/j.jenvman.2018.12.003

A multi-country analysis of the 2007–2009 financial crisis: empirical results from discrete and continuous time models
Dontis-Charitos, P., Jory, S.R., Ngo, T.N. and Nowman, K.B. 2013. A multi-country analysis of the 2007–2009 financial crisis: empirical results from discrete and continuous time models. Applied Financial Economics. 23 (11), pp. 929-950. https://doi.org/10.1080/09603107.2013.778944

Shanghai, Dubai, Mumbai or Goodbye?
Jory, S.R., Perry, M. and Hemphill, T. 2010. Shanghai, Dubai, Mumbai or Goodbye? Review of Economic and Business Studies. 4, pp. 103-124.

The wealth effects of investing in information technology: the case of Sarbanes-Oxley section 404 compliance
Jory, S.R., Peng, J. and Ford, C.O. 2010. The wealth effects of investing in information technology: the case of Sarbanes-Oxley section 404 compliance. Review of Accounting and Finance. 9 (3), pp. 285-305. https://doi.org/10.1108/14757701011068075

Acquisitions of bankrupt assets
Jory, S.R. and Madura, J. 2009. Acquisitions of bankrupt assets. Quarterly Review of Economics and Finance. 49 (3), pp. 748-759. https://doi.org/10.1016/j.qref.2008.12.001

Tequila effect
Jory, S.R. 2009. Tequila effect. in: Wankel, C. (ed.) Encyclopedia of business in today's world London Sage.

Lombard rate
Jory, S.R. 2009. Lombard rate. in: Wankel, C. (ed.) Encyclopedia of business in today's world London Sage.

Asian financial crisis
Jory, S.R. 2009. Asian financial crisis. in: Wankel, C. (ed.) Encyclopedia of business in today's world London Sage.

Takeovers of newly public targets
Akhigbe, A., Jory, S.R. and Madura, J. 2009. Takeovers of newly public targets. Applied Financial Economics. 19 (19), pp. 1523-1530. https://doi.org/10.1080/09603100802599555

International evidence on the relationship between trading volume and serial correlation in stock returns
Jory, S.R. and Ngo, T.N. 2008. International evidence on the relationship between trading volume and serial correlation in stock returns. Global Journal of Finance and Banking Issues. 2 (2), pp. 1-13.

An analysis of sovereign wealth funds' recent venture in developed capital markets
Jory, S.R., Perry, M. and Hemphill, T. 2008. An analysis of sovereign wealth funds' recent venture in developed capital markets. Management Online Review.

Cross-sectional variation in the long-run performance of capital-raising depositary receipts and their underlying stocks
Jory, S.R. and Ngo, T.N. 2008. Cross-sectional variation in the long-run performance of capital-raising depositary receipts and their underlying stocks. Global Business & Finance Review. 13 (1), pp. 1-13.

Equity offerings by firms that emerged from bankruptcy
Jory, S.R. 2008. Equity offerings by firms that emerged from bankruptcy. Journal of Entrepreneurial Finance and Business Ventures. 12 (2), pp. 1-22.

Venture-capital funding: when and where?
Jory, S.R., Madura, J. and Susnjara, J. 2007. Venture-capital funding: when and where? Corporate Finance Review. 12 (1), pp. 24-27.

Permalink - https://westminsterresearch.westminster.ac.uk/item/9024x/the-long-run-performance-of-firms-emerging-from-chapter-11-bankruptcy


Share this

Usage statistics

163 total views
0 total downloads
These values cover views and downloads from WestminsterResearch and are for the period from September 2nd 2018, when this repository was created.