When Should Bankruptcy Law Be Creditor- or Debtor-Friendly? Theory and Evidence

• 成果类型: Article
• 署名作者: Schoenherr, David; Starmans, Jan
• 署名单位: Princeton University; Stockholm School of Economics
• 刊物名称: JOURNAL OF FINANCE
• ISSN/ISSBN: 0022-1082
• DOI: 10.1111/jofi.13171
• 发表日期: 2022
• 页码: 2669-2717
• 关键词: investor protection; capital structure; private benefits; Agency problems; voting-rights; corporate; RISK; firm; access; diversification

摘要

We examine how creditor protection affects firms with different levels of owners' and managers' personal costs of bankruptcy (PCB). Theoretically, we show that firms with high PCB borrow and invest more under a more debtor-friendly management stay system, whereas firms with low PCB borrow and invest more under a more creditor-friendly receivership system. Intuitively, stronger creditor protection relaxes financial constraints but reduces credit demand. Which effect dominates depends on owners' and managers' PCB. Empirically, we find support for these predictions using a Korean bankruptcy reform that replaced receivership with management stay.