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Corporate Ownership Structure and the Evolution of Bankruptcy Law in the US and UK

Author

Listed:
  • John Armour
  • B.R. Cheffins
  • D.A. Skeel Jr.

Abstract

The past decade has seen intense academic debates over possible explanations for the different systems of corporate ownership and control that exist in developed economies. Yet the role of bankruptcy as a mechanism of corporate governance has received relatively little attention. Furthermore, many theories have failed to account successfully for events occurring in the UK, notwithstanding its similarity to the US. In response, this paper offers an account of the complementarities between bankruptcy law and ownership structure, which it is argued can explain developments in both the UK and the US. By identifying the effects of concentration or dispersion in firms' capital structure (across both equity and debt), and by analysing implications of these capital structure choices for bankruptcy, the paper develops a richer account of the corporate governance patterns we see in different nations.

Suggested Citation

  • John Armour & B.R. Cheffins & D.A. Skeel Jr., 2002. "Corporate Ownership Structure and the Evolution of Bankruptcy Law in the US and UK," Working Papers wp226, Centre for Business Research, University of Cambridge.
  • Handle: RePEc:cbr:cbrwps:wp226
    Note: PRO-2
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    Cited by:

    1. Paolo Di Martino & Michelangelo Vasta, 2010. "Companies' insolvency and 'the nature of the firm' in Italy, 1920s-70s -super-1," Economic History Review, Economic History Society, vol. 63(1), pages 137-164, February.
    2. Viral V. Acharya & Krishnamurthy V. Subramanian, 2009. "Bankruptcy Codes and Innovation," Review of Financial Studies, Society for Financial Studies, vol. 22(12), pages 4949-4988, December.
    3. repec:dau:papers:123456789/13599 is not listed on IDEAS
    4. repec:eee:corfin:v:48:y:2018:i:c:p:292-313 is not listed on IDEAS
    5. Simon Deakin, 2013. "The Legal Framework Governing Business Firms & its Implications for Manufacturing Scale & Performance: The UK Experience in International Perspective," Working Papers wp449, Centre for Business Research, University of Cambridge.
    6. Armour John & Hsu Audrey Wen-hsin & Walters Adrian, 2012. "The Costs and Benefits of Secured Creditor Control in Bankruptcy: Evidence from the UK," Review of Law & Economics, De Gruyter, vol. 8(1), pages 101-135, May.

    More about this item

    Keywords

    Bankruptcy; Law and Finance; Ownership Structure; Debt Concentration;

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law

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