An Economic Analysis of Transnational Bankruptcies
AbstractThis paper analyzes the effects of the legal rules governing transnational bankruptcies. We compare a regime of "territoriality" in which assets are adjudicated by the jurisdiction in which they are located at the time of the bankruptcy with a regime of "universality" in which all assets are adjudicated in a single jurisdiction. Territoriality is shown to generate a distortion in investment patterns that might lead to an inefficient allocation of capital across countries. We also analyze who gains and who loses from territoriality, explain why countries engage in it even though it reduces global welfare, and identify what can be done to achieve universality. Copyright 1999 by the University of Chicago.
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Bibliographic InfoArticle provided by University of Chicago Press in its journal Journal of Law & Economics.
Volume (Year): 42 (1999)
Issue (Month): 2 (October)
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Web page: http://www.journals.uchicago.edu/JLE/
Other versions of this item:
- Lucian Arye Bebchuk & Andrew T. Guzman, 2000. "An Economic Analysis of Transnational Bankruptcies," NBER Working Papers 6521, National Bureau of Economic Research, Inc.
- G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
- G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
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