Judicial Discretion in Corporate Bankruptcy
We study a demand and supply model of judicial discretion in corporate bankruptcy. On the supply side, we assume that bankruptcy courts may be biased for debtors or creditors, and subject to career concerns. On the demand side, we assume that debtors (and creditors) can engage in forum shopping at some cost. A key finding is that stronger creditor protection in reorganization improves judicial incentives to resolve financial distress efficiently, preventing a "race to the bottom" towards inefficient uses of judicial discretion. The comparative statics of our model shed light on a wealth of evidence on U.S. bankruptcy and yield novel predictions on how bankruptcy codes should affect firm-level outcomes.
|Date of creation:||Apr 2008|
|Note:||This version: December 2007|
|Contact details of provider:|| Postal: 2-1 Naka, Kunitachi, Tokyo 186-8603|
Web page: http://cei.ier.hit-u.ac.jp/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Nicola Gennaioli & Andrei Shleifer, 2008.
"Judicial Fact Discretion,"
The Journal of Legal Studies,
University of Chicago Press, vol. 37(1), pages 1-35, 01.
- Nicola Gennaioli & Andrei Shleifer, 2006. "Judicial Fact Discretion," NBER Working Papers 12679, National Bureau of Economic Research, Inc.
- Gennaioli, Nicola & Shleifer, Andrei, 2008. "Judicial Fact Discretion," Scholarly Articles 3451304, Harvard University Department of Economics.
- Schwartz, Alan, 1997. "Contracting about Bankruptcy," Journal of Law, Economics and Organization, Oxford University Press, vol. 13(1), pages 127-146, April.
- Alan Schwartz, 1997. "Contracting About Bankruptcy," Yale School of Management Working Papers ysm71, Yale School of Management.
- Dan Bernhardt & Ed Nosal, 2004. "Near-sighted Justice," Journal of Finance, American Finance Association, vol. 59(6), pages 2655-2684, December.
- Dan Bernhardt & Ed Nosal, 2003. "Nearsighted justice," Working Paper 0304, Federal Reserve Bank of Cleveland.
- Julian R. Franks & Kjell G. Nyborg & Walter N. Torous, 1996. "A Comparison of UK, US and German Insolvency Codes," Financial Management, Financial Management Association, vol. 25(3), Fall.
- Kenneth Ayotte & Hayong Yun, "undated". "Matching Bankruptcy Laws to Legal Environments," American Law & Economics Association Annual Meetings 1018, American Law & Economics Association.
- Gilson, Stuart C. & John, Kose & Lang, Larry H. P., 1990. "Troubled debt restructurings*1: An empirical study of private reorganization of firms in default," Journal of Financial Economics, Elsevier, vol. 27(2), pages 315-353, October.
- Gennaioli, Nicola & Rossi, Stefano, 2008. "Optimal Resolutions of Financial Distress by Contract," CEI Working Paper Series 2008-6, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University. Full references (including those not matched with items on IDEAS)