Do Market Prices Improve the Accuracy of Court Valuations in Chapter 11?

• 成果类型: Article
• 署名作者: Demiroglu, Cem; Franks, Julian; Lewis, Ryan
• 署名单位: Koc University; University of London; London Business School; University of Colorado System; University of Colorado Boulder
• 刊物名称: JOURNAL OF FINANCE
• ISSN/ISSBN: 0022-1082
• DOI: 10.1111/jofi.13111
• 发表日期: 2022
• 页码: 1179-1218
• 关键词: ABSOLUTE PRIORITY; corporate; TRANSPARENCY; bankruptcy; liquidity; auction; COSTS; debt

摘要

The average difference between the court value and postemergence market value of newly issued stocks in Chapter 11 reorganizations exceeds 50%. We show that public dissemination of transactions in defaulted bonds reduces this difference by 23% and largely eliminates interclaimant wealth transfers. The effects of dissemination are only significant when the bonds are sufficiently traded around the court valuation date and when they receive significant amounts of postemergence equity, indicating that the bond's value is sensitive to the size and allocation of the pie. These findings imply that security prices have real effects: they improve the valuations of bankruptcy participants.