Bankruptcy court establishment and corporate risk-taking

Yue Zhang and Kai Wu

Finance Research Letters, 2023, vol. 58, issue PC

Abstract: This study examines the influence of bankruptcy courts on the risk-taking behavior of listed firms in China between 2002 and 2019. The establishment of bankruptcy courts discourages listed firms from taking excessive risk. This effect is more pronounced in firms with financing constraints, high market valuations, and those operating in regions with a weaker rule of law. Overall, our findings indicate that establishing bankruptcy courts benefits creditors’ rights and restrains corporate risk-taking.

Keywords: Bankruptcy court; Judicial practice; Risk-taking (search for similar items in EconPapers)
JEL-codes: G31 G32 G33 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:58:y:2023:i:pc:s1544612323008620

DOI: 10.1016/j.frl.2023.104490

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