Resolution of Corporate Distress Evidence from East Asia's Financial Crisis
Resolution of Corporate Distress: Evidence from East Asia's Financial Crisis

June 1999 - Evidence from East Asia suggests that a firm's ownership relationship with a family or bank provides insurance against the likelihood of bankruptcy during bad times, possibly at the expense of minority shareholders. Bankruptcy is more likely in countries with strong creditor rights...

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Bibliographische Detailangaben
1. Verfasser: Klapper, Leora (VerfasserIn)
Format: Elektronisch E-Book
Sprache:English
Veröffentlicht: Washington, D.C The World Bank 1999
Schlagworte:
Bank
Bankruptcy
Bankruptcy Filing
Bankruptcy Filings
Banks and Banking Reform
Cred Creditor
Creditors
Debt
Debt Markets
Earnings
Economic Theory and Research
Emerging Markets
Expenses
Finance and Financial Sector Development
Financial Crisis
Financial Distress
Financial Institutions
Financial Literacy
Interest
Loan
Macroeconomics and Economic Growth
Ownership
Private Sector Development
Probability
Regression Analysis
Stakeholders
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Zusammenfassung:June 1999 - Evidence from East Asia suggests that a firm's ownership relationship with a family or bank provides insurance against the likelihood of bankruptcy during bad times, possibly at the expense of minority shareholders. Bankruptcy is more likely in countries with strong creditor rights and a good judicial system - perhaps because creditors are more likely to force a firm to file for bankruptcy. The widespread financial crisis in East Asia caused large economic shocks, which varied by degree across the region. That crisis provides a unique opportunity for investigating the factors that determine the use of bankruptcy processes in a number of economies. Claessens, Djankov, and Klapper study the use of bankruptcy in Hong Kong, Indonesia, Japan, the Republic of Korea, Malaysia, the Philippines, Singapore, Taiwan (China), and Thailand. These economies differ in their institutional frameworks for resolving financial distress, partly because of the different origins of their judicial systems. One difference is the strength of creditor rights, which Claessens, Djankov, and Klapper document. They expect that differences in legal enforcement and judicial efficiency should affect the resolution of financial distress. Using a sample of 4,569 publicly traded East Asian firms, they observe a total of 106 bankruptcies in 1997 and 1998. They find that: · The likelihood of filing for bankruptcy is lower for firms with ownership links to banks and families, controlling for firm and country characteristics. · Filings are more likely in countries with better judicial systems. · Filings are more likely where there are both strong creditor rights and a good judicial system. These results alone do not allow Claessens, Djankov, and Klapper to address whether increased use of bankruptcy is an efficient resolution mechanism. This paper - a product of the Financial Economics Unit, Financial Sector Practice Department - is part of a
Beschreibung:Weitere Ausgabe: Klapper, Leora : Resolution of Corporate Distress
Beschreibung:1 Online-Ressource (1 online resource (33 p.))
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