IDEAS home Printed from https://ideas.repec.org/p/ecl/stabus/3387.html

Asset Allocation in Bankruptcy

Author

Listed:
  • Bernstein, Shai

    (Stanford University)

  • Colonnelli, Emanuele

    (Stanford University)

  • Iverson, Benjamin

    (Northwestern University)

Abstract

This paper investigates the consequences of liquidation and reorganization on the allocation and subsequent utilization of assets in bankruptcy. We identify 129,000 bankrupt establishments and construct a novel dataset that tracks the occupancy, employment and wages paid at real estate assets over time. Using the random assignment of judges to bankruptcy cases as a natural experiment that forces some firms into liquidation, we find that even after accounting for reallocation, the long-run utilization of assets of liquidated firms is lower relative to assets of reorganized firms. These effects are concentrated in thin markets with few potential users, in areas with low access to finance, and in areas with low economic growth, with magnitudes that illustrate their economic importance. The results highlight that different bankruptcy approaches affect asset allocation and utilization particularly when search and financial frictions are present.

Suggested Citation

  • Bernstein, Shai & Colonnelli, Emanuele & Iverson, Benjamin, 2016. "Asset Allocation in Bankruptcy," Research Papers 3387, Stanford University, Graduate School of Business.
    • Handle: RePEc:ecl:stabus:3387
    as

    Download full text from publisher

    File URL: http://www.gsb.stanford.edu/gsb-cmis/gsb-cmis-download-auth/408661
    Download Restriction: no
    ---><---

    Other versions of this item:

    More about this item

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ecl:stabus:3387. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/gsstaus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.