The Brazilian bankruptcy law experience

Aloisio Araujo, Rafael Ferreira and Bruno Funchal ()

Journal of Corporate Finance, 2012, vol. 18, issue 4, 994-1004

Abstract: In early 2005, the Brazilian Congress approved a new bankruptcy law. The new legislation increased creditor protection and improved the efficiency of the bankruptcy system. This paper evaluates the empirical consequences of a bankruptcy reform on a poorly developed credit market. Using data from Brazilian and non-Brazilian firms, we estimated, using two different models, the effect of the bankruptcy reform on contractual and non-contractual debt variables. In general, both models yielded similar results. Concerning contractual debt variables, we found a significant increase in the total amount and the long-term debt and a reduction in the cost of debt. For the non-contractual debt variable, we found no effect in the loans’ ownership structure.

Keywords: Financing policy; Bankruptcy; Law (search for similar items in EconPapers)
JEL-codes: G32 G33 K2 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (50)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:18:y:2012:i:4:p:994-1004

DOI: 10.1016/j.jcorpfin.2012.03.001

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