Download This PaperBankrupt Family Firms
45 Pages Posted: 17 Feb 2015 Last revised: 15 Oct 2016
Date Written: October 14, 2016
Abstract
We study the role of family ownership during the bankruptcy process. We argue that at times of distress family blockholders are better positioned to manage the firm and this is appreciated by minority shareholders and lenders alike. We test this hypothesis focusing on the sample of public US corporations between 2001 and 2008. First, we show that family firms are less engaged in forum shopping, emerge from bankruptcy faster and have higher recovery rates on debt. We further show that this translates into smaller drops in stock prices around bankruptcy filings, and has implications for ex-ante borrowing yields.
Keywords: Family Firms, Control Blocks, Bankruptcy, Agency Costs of Debt, Inheritance Taxes
JEL Classification: G32, G34
Suggested Citation: Suggested Citation
Massimo Massa
INSEAD - Finance ( email )
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National University of Singapore (NUS) - Sustainable & Green Finance Institute (SGFIN) ( email )
Singapore