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Bankruptcy and institutions

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  • Alexeev, Michael
  • Kim, Jounghyeon

Abstract

We use a simple model to show that the importance of retained earnings and ownership concentration as bankruptcy determinants is inversely related to institutional quality. A test employing firm-level data for Korea and the US is consistent with this prediction.

Suggested Citation

  • Alexeev, Michael & Kim, Jounghyeon, 2012. "Bankruptcy and institutions," Economics Letters, Elsevier, vol. 117(3), pages 676-678.
    • Handle: RePEc:eee:ecolet:v:117:y:2012:i:3:p:676-678
    DOI: 10.1016/j.econlet.2012.08.021
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    References listed on IDEAS

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    1. Duffie, Darrell & Saita, Leandro & Wang, Ke, 2007. "Multi-period corporate default prediction with stochastic covariates," Journal of Financial Economics, Elsevier, vol. 83(3), pages 635-665, March.
    2. Rafael La Porta & Florencio Lopez‐De‐Silanes & Andrei Shleifer & Robert Vishny, 2002. "Investor Protection and Corporate Valuation," Journal of Finance, American Finance Association, vol. 57(3), pages 1147-1170, June.
    3. Johnson, Simon & Boone, Peter & Breach, Alasdair & Friedman, Eric, 2000. "Corporate governance in the Asian financial crisis," Journal of Financial Economics, Elsevier, vol. 58(1-2), pages 141-186.
    4. Philip Gharghori & Howard Chan & Robert Faff, 2006. "Investigating the Performance of Alternative Default-Risk Models: Option-Based Versus Accounting-Based Approaches," Australian Journal of Management, Australian School of Business, vol. 31(2), pages 207-234, December.
    5. Arindam Bandyopadhyay, 2006. "Predicting probability of default of Indian corporate bonds: logistic and Z-score model approaches," Journal of Risk Finance, Emerald Group Publishing, vol. 7(3), pages 255-272, May.
    6. Alexeev, Michael & Kim, Sunghwan, 2008. "The Korean financial crisis and the soft budget constraint," Journal of Economic Behavior & Organization, Elsevier, vol. 68(1), pages 178-193, October.
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    Cited by:

    1. Crosato, Lisa & Domenech, Josep & Liberati, Caterina, 2021. "Predicting SME’s default: Are their websites informative?," Economics Letters, Elsevier, vol. 204(C).
    2. Jounghyeon Kim, 2020. "Determinants of Corporate Bankruptcy: Evidence from Chaebol and Non‐Chaebol Firms in Korea," Asian Economic Journal, East Asian Economic Association, vol. 34(3), pages 275-300, September.

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    More about this item

    Keywords

    Bankruptcy; Institutions; Ownership concentration;
    All these keywords.

    JEL classification:

    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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