Corporate Bankruptcy and Managers' Self-Serving Behavior
The authors investigate whether insiders of bankrupt firms hold less stock or reduce their stockholdings compared to what they observed for insiders of similar firms that do not go bankrupt. They find little evidence of such time-series and cross-sectional differences in spite of the fact that the stock value of bankrupt firms falls by more than 90 percent in the five years preceding bankruptcy. One implication of the results is that the amount of stock owned and the magnitude of the trades undertaken by corporate insiders of both bankrupt and nonbankrupt firms appear to provide no information about firm value. Copyright 1989 by American Finance Association.
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Volume (Year): 44 (1989)
Issue (Month): 4 (September)
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