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 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.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 6521.
Date of creation: Mar 2000
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Publication status: published as The Journal of Law and Economics, vol. XLII, no. 2, pp. 775-808, 1999.
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- Bebchuk, Lucian Arye & Guzman, Andrew T, 1999. "An Economic Analysis of Transnational Bankruptcies," Journal of Law and Economics, University of Chicago Press, vol. 42(2), pages 775-808, October.
- G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
- G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
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