EconPapers    
Economics at your fingertips  
 

Testing the impact of liquidation speed on leverage using Indian data

Biswajit Banerjee () and Risto Herrala
Additional contact information
Biswajit Banerjee: Ashoka University
Risto Herrala: The Bank of Finland Institute for Emerging Economies

No 113, Working Papers from Ashoka University, Department of Economics

Abstract: The paper investigates the influence of the speed of liquidation of insolvent firms on leverage. The theoretical model presented formalizes the intuitive view that an increase in liquidation speed is expected to decrease average leverage as highly leveraged firms exit. Analysis of Indian data, however, suggests that an increase in liquidation speed increases average leverage. This finding is linked to influential observations at the right tail of the leverage distribution. We propose an asset-weighted variant of the proposition that holds with empirical data.

Keywords: Indian; economy; Insolvency; and; bankruptcy; code; Leverage; Liquidation; speed (search for similar items in EconPapers)
Pages: 23
Date: 2024-04-30
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://dp.ashoka.edu.in/ash/wpaper/paper113_0.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ash:wpaper:113

Access Statistics for this paper

More papers in Working Papers from Ashoka University, Department of Economics
Bibliographic data for series maintained by Ashoka University ().

 
Page updated 2025-03-31
Handle: RePEc:ash:wpaper:113