Asset Allocation in Bankruptcy

Asset Allocation in Bankruptcy

  • SHAI BERNSTEIN
  • EMANUELE COLONNELLI
  • BENJAMIN IVERSON

Article first published online: 25th October 2018 DOI: 10.1111/jofi.12740

Abstract


This paper investigates the consequences of liquidation and reorganization on the allocation and subsequent utilization of assets in bankruptcy. Using the random assignment of judges to bankruptcy cases as a natural experiment that forces some firms into liquidation, we find that 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 and in areas with low access to finance. These findings suggest that when search frictions are large, liquidation can lead to inefficient allocation of assets in bankruptcy.

Sign in to access the full article.

Related articles


MISCELLANEA

Article first published online: 25th January 2019 / DOI: 10.1111/jofi.12621

Read Article

ANNOUNCEMENTS

Article first published online: 25th January 2019 / DOI: 10.1111/jofi.12622

Read Article

AMERICAN FINANCE ASSOCIATION

  • Kenneth Singleton

Article first published online: 25th January 2019 / DOI: 10.1111/jofi.12623

Read Article

ISSUE INFORMATION FM

Article first published online: 25th January 2019 / DOI: 10.1111/jofi.12624

Read Article

ISSUE INFORMATION BM

Article first published online: 25th January 2019 / DOI: 10.1111/jofi.12625

Read Article

Funding Value Adjustments

  • LEIF ANDERSEN
  • DARRELL DUFFIE
  • YANG SONG

Article first published online: 26th October 2018 / DOI: 10.1111/jofi.12739

Read Article

Are you an Author?


Please read our submission requirements and find out how to submit your paper to the Journal of Finance

Submit a paper