How do insolvency codes affect a firm's investment?

Julio Pindado, Luis Rodrigues and Chabela de la Torre

International Review of Law and Economics, 2008, vol. 28, issue 4, 227-238

Abstract: This paper provides an ex ante analysis of the effect of financial insolvency codes on investment by examining the main characteristics embodied in several codes that may cause investment distortions. The results from the estimation of an extended version of the q model of investment show a negative relationship between ex ante insolvency costs and investment. Furthermore, most of the analysed characteristics of insolvency codes negatively impact on investment; however, the magnitude of this effect is greater concerning those of reorganization without creditors' consent and creditors' lack of control, as compared to those of automatic stay and the violation of absolute priority.

Keywords: Insolvency; codes; Investment; Insolvency; costs (search for similar items in EconPapers)
Date: 2008
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0144-8188(08)00055-0
Full text for ScienceDirect subscribers only

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:eee:irlaec:v:28:y:2008:i:4:p:227-238

Access Statistics for this article

International Review of Law and Economics is currently edited by C. Ott, A. W. Katz and H-B. Schäfer

More articles in International Review of Law and Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().