Trading activity around chapter 11 filing

Patricia Chelley-Steeley and Neophytos Lambertides

International Review of Financial Analysis, 2022, vol. 82, issue C

Abstract: This paper uses institutional ownership data and order flow information to document and explain equity trading patterns prior to chapter 11 bankruptcy filing.We provide a model that predicts trading activity prior to filing which results from a difference of opinion amongst different types of investors about whether the firm should be liquidated. We then test trading data to show that trading activity is elevated around chapter 11 filing as the model predicts. We show how institutional holdings change around filing and that chapter 7 firms appear relatively more attractive to institutional investors than emerging firms around filing.

Keywords: Chapter 11 and 7 bankruptcy; Trading activity; Institutional ownership (search for similar items in EconPapers)
JEL-codes: G12 G14 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:82:y:2022:i:c:s1057521922000989

DOI: 10.1016/j.irfa.2022.102130

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