Do Reorganization Costs Matter for Efficiency? Evidence from a Bankruptcy Reform in Colombia
The authors study the effect of reorganization costs on the efficiency of bankruptcy laws. They develop a simple model that predicts that in a regime with high costs, the law fails to achieve the efficient outcome of liquidating unviable businesses and reorganizing viable ones. The authors test the model using the Colombian bankruptcy reform of 1999. Using data from 1,924 firms filing for bankruptcy between 1996 and 2003, they find that the pre-reform reorganization proceeding was so inefficient that it failed to separate economically viable firms from inefficient ones. In contrast, by substantially lowering reorganization costs, the reform improved the selection of viable firms into reorganization. In this sense, the new law increased the efficiency of the bankruptcy system in Colombia.
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dig-okr-1098683752024-08-08T17:08:45Z Do Reorganization Costs Matter for Efficiency? Evidence from a Bankruptcy Reform in Colombia Love, Inessa Giné, Xavier ACCOUNTING BANKRUPTCY BANKRUPTCY CASES BANKRUPTCY CODES BANKRUPTCY FILINGS BANKRUPTCY LAW BANKRUPTCY LAWS BANKRUPTCY PROCEEDINGS BANKS BOOK VALUE BRANCHES CONFLICTS OF INTEREST COUNTRY COMPARISONS CURRENT ASSETS DEBT ECONOMETRIC MODELS EXPECTED RETURN FINANCIAL CRISIS FINANCIAL DATA FINANCIAL STATEMENTS FIRM PERFORMANCE FIRM SIZE ILLIQUIDITY INDIRECT COST INITIAL FILING LAW FIRMS LIMITED LIQUIDATION LIQUIDATION VALUE LIQUIDATIONS MACROECONOMIC CONDITIONS MANAGERS PROBABILITY MODELS PROXY PUBLIC CORPORATIONS PUBLIC FIRMS REGRESSION ANALYSIS REORGANIZATION REORGANIZATION PLAN REORGANIZATION PLANS REORGANIZATIONS RETAINED EARNINGS RETURN ON ASSETS SMALL FIRMS STOCK EXCHANGE STOCK MARKET TOTAL COSTS TRANSACTION COSTS VARIABLE COSTS WAGES WORKING CAPITAL The authors study the effect of reorganization costs on the efficiency of bankruptcy laws. They develop a simple model that predicts that in a regime with high costs, the law fails to achieve the efficient outcome of liquidating unviable businesses and reorganizing viable ones. The authors test the model using the Colombian bankruptcy reform of 1999. Using data from 1,924 firms filing for bankruptcy between 1996 and 2003, they find that the pre-reform reorganization proceeding was so inefficient that it failed to separate economically viable firms from inefficient ones. In contrast, by substantially lowering reorganization costs, the reform improved the selection of viable firms into reorganization. In this sense, the new law increased the efficiency of the bankruptcy system in Colombia. 2012-06-18T21:52:24Z 2012-06-18T21:52:24Z 2006-07 http://documents.worldbank.org/curated/en/2006/07/6938466/reorganization-costs-matter-efficiency-evidence-bankruptcy-reform-colombia https://hdl.handle.net/10986/8375 English Policy Research Working Paper; No. 3970 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank application/pdf text/plain World Bank, Washington, DC |
| institution |
Banco Mundial |
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DSpace |
| country |
Estados Unidos |
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US |
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Bibliográfico |
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En linea |
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dig-okr |
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biblioteca |
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America del Norte |
| libraryname |
Biblioteca del Banco Mundial |
| language |
English |
| topic |
ACCOUNTING BANKRUPTCY BANKRUPTCY CASES BANKRUPTCY CODES BANKRUPTCY FILINGS BANKRUPTCY LAW BANKRUPTCY LAWS BANKRUPTCY PROCEEDINGS BANKS BOOK VALUE BRANCHES CONFLICTS OF INTEREST COUNTRY COMPARISONS CURRENT ASSETS DEBT ECONOMETRIC MODELS EXPECTED RETURN FINANCIAL CRISIS FINANCIAL DATA FINANCIAL STATEMENTS FIRM PERFORMANCE FIRM SIZE ILLIQUIDITY INDIRECT COST INITIAL FILING LAW FIRMS LIMITED LIQUIDATION LIQUIDATION VALUE LIQUIDATIONS MACROECONOMIC CONDITIONS MANAGERS PROBABILITY MODELS PROXY PUBLIC CORPORATIONS PUBLIC FIRMS REGRESSION ANALYSIS REORGANIZATION REORGANIZATION PLAN REORGANIZATION PLANS REORGANIZATIONS RETAINED EARNINGS RETURN ON ASSETS SMALL FIRMS STOCK EXCHANGE STOCK MARKET TOTAL COSTS TRANSACTION COSTS VARIABLE COSTS WAGES WORKING CAPITAL ACCOUNTING BANKRUPTCY BANKRUPTCY CASES BANKRUPTCY CODES BANKRUPTCY FILINGS BANKRUPTCY LAW BANKRUPTCY LAWS BANKRUPTCY PROCEEDINGS BANKS BOOK VALUE BRANCHES CONFLICTS OF INTEREST COUNTRY COMPARISONS CURRENT ASSETS DEBT ECONOMETRIC MODELS EXPECTED RETURN FINANCIAL CRISIS FINANCIAL DATA FINANCIAL STATEMENTS FIRM PERFORMANCE FIRM SIZE ILLIQUIDITY INDIRECT COST INITIAL FILING LAW FIRMS LIMITED LIQUIDATION LIQUIDATION VALUE LIQUIDATIONS MACROECONOMIC CONDITIONS MANAGERS PROBABILITY MODELS PROXY PUBLIC CORPORATIONS PUBLIC FIRMS REGRESSION ANALYSIS REORGANIZATION REORGANIZATION PLAN REORGANIZATION PLANS REORGANIZATIONS RETAINED EARNINGS RETURN ON ASSETS SMALL FIRMS STOCK EXCHANGE STOCK MARKET TOTAL COSTS TRANSACTION COSTS VARIABLE COSTS WAGES WORKING CAPITAL |
| spellingShingle |
ACCOUNTING BANKRUPTCY BANKRUPTCY CASES BANKRUPTCY CODES BANKRUPTCY FILINGS BANKRUPTCY LAW BANKRUPTCY LAWS BANKRUPTCY PROCEEDINGS BANKS BOOK VALUE BRANCHES CONFLICTS OF INTEREST COUNTRY COMPARISONS CURRENT ASSETS DEBT ECONOMETRIC MODELS EXPECTED RETURN FINANCIAL CRISIS FINANCIAL DATA FINANCIAL STATEMENTS FIRM PERFORMANCE FIRM SIZE ILLIQUIDITY INDIRECT COST INITIAL FILING LAW FIRMS LIMITED LIQUIDATION LIQUIDATION VALUE LIQUIDATIONS MACROECONOMIC CONDITIONS MANAGERS PROBABILITY MODELS PROXY PUBLIC CORPORATIONS PUBLIC FIRMS REGRESSION ANALYSIS REORGANIZATION REORGANIZATION PLAN REORGANIZATION PLANS REORGANIZATIONS RETAINED EARNINGS RETURN ON ASSETS SMALL FIRMS STOCK EXCHANGE STOCK MARKET TOTAL COSTS TRANSACTION COSTS VARIABLE COSTS WAGES WORKING CAPITAL ACCOUNTING BANKRUPTCY BANKRUPTCY CASES BANKRUPTCY CODES BANKRUPTCY FILINGS BANKRUPTCY LAW BANKRUPTCY LAWS BANKRUPTCY PROCEEDINGS BANKS BOOK VALUE BRANCHES CONFLICTS OF INTEREST COUNTRY COMPARISONS CURRENT ASSETS DEBT ECONOMETRIC MODELS EXPECTED RETURN FINANCIAL CRISIS FINANCIAL DATA FINANCIAL STATEMENTS FIRM PERFORMANCE FIRM SIZE ILLIQUIDITY INDIRECT COST INITIAL FILING LAW FIRMS LIMITED LIQUIDATION LIQUIDATION VALUE LIQUIDATIONS MACROECONOMIC CONDITIONS MANAGERS PROBABILITY MODELS PROXY PUBLIC CORPORATIONS PUBLIC FIRMS REGRESSION ANALYSIS REORGANIZATION REORGANIZATION PLAN REORGANIZATION PLANS REORGANIZATIONS RETAINED EARNINGS RETURN ON ASSETS SMALL FIRMS STOCK EXCHANGE STOCK MARKET TOTAL COSTS TRANSACTION COSTS VARIABLE COSTS WAGES WORKING CAPITAL Love, Inessa Giné, Xavier Do Reorganization Costs Matter for Efficiency? Evidence from a Bankruptcy Reform in Colombia |
| description |
The authors study the effect of reorganization costs on the efficiency of bankruptcy laws. They develop a simple model that predicts that in a regime with high costs, the law fails to achieve the efficient outcome of liquidating unviable businesses and reorganizing viable ones. The authors test the model using the Colombian bankruptcy reform of 1999. Using data from 1,924 firms filing for bankruptcy between 1996 and 2003, they find that the pre-reform reorganization proceeding was so inefficient that it failed to separate economically viable firms from inefficient ones. In contrast, by substantially lowering reorganization costs, the reform improved the selection of viable firms into reorganization. In this sense, the new law increased the efficiency of the bankruptcy system in Colombia. |
| topic_facet |
ACCOUNTING BANKRUPTCY BANKRUPTCY CASES BANKRUPTCY CODES BANKRUPTCY FILINGS BANKRUPTCY LAW BANKRUPTCY LAWS BANKRUPTCY PROCEEDINGS BANKS BOOK VALUE BRANCHES CONFLICTS OF INTEREST COUNTRY COMPARISONS CURRENT ASSETS DEBT ECONOMETRIC MODELS EXPECTED RETURN FINANCIAL CRISIS FINANCIAL DATA FINANCIAL STATEMENTS FIRM PERFORMANCE FIRM SIZE ILLIQUIDITY INDIRECT COST INITIAL FILING LAW FIRMS LIMITED LIQUIDATION LIQUIDATION VALUE LIQUIDATIONS MACROECONOMIC CONDITIONS MANAGERS PROBABILITY MODELS PROXY PUBLIC CORPORATIONS PUBLIC FIRMS REGRESSION ANALYSIS REORGANIZATION REORGANIZATION PLAN REORGANIZATION PLANS REORGANIZATIONS RETAINED EARNINGS RETURN ON ASSETS SMALL FIRMS STOCK EXCHANGE STOCK MARKET TOTAL COSTS TRANSACTION COSTS VARIABLE COSTS WAGES WORKING CAPITAL |
| author |
Love, Inessa Giné, Xavier |
| author_facet |
Love, Inessa Giné, Xavier |
| author_sort |
Love, Inessa |
| title |
Do Reorganization Costs Matter for Efficiency? Evidence from a Bankruptcy Reform in Colombia |
| title_short |
Do Reorganization Costs Matter for Efficiency? Evidence from a Bankruptcy Reform in Colombia |
| title_full |
Do Reorganization Costs Matter for Efficiency? Evidence from a Bankruptcy Reform in Colombia |
| title_fullStr |
Do Reorganization Costs Matter for Efficiency? Evidence from a Bankruptcy Reform in Colombia |
| title_full_unstemmed |
Do Reorganization Costs Matter for Efficiency? Evidence from a Bankruptcy Reform in Colombia |
| title_sort |
do reorganization costs matter for efficiency? evidence from a bankruptcy reform in colombia |
| publisher |
World Bank, Washington, DC |
| publishDate |
2006-07 |
| url |
http://documents.worldbank.org/curated/en/2006/07/6938466/reorganization-costs-matter-efficiency-evidence-bankruptcy-reform-colombia https://hdl.handle.net/10986/8375 |
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AT loveinessa doreorganizationcostsmatterforefficiencyevidencefromabankruptcyreformincolombia AT ginexavier doreorganizationcostsmatterforefficiencyevidencefromabankruptcyreformincolombia |
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1807159666044567552 |