Determinants of bankruptcy regime choice for Canadian public firms

Mohamed A. Ayadi, Skander Lazrak and Robert Welch

Research in International Business and Finance, 2017, vol. 42, issue C, 161-172

Abstract: Distressed Canadian public firms usually file for bankruptcy protection under either the Bankruptcy and Insolvency Act (BIA) or the more flexible Companies Creditors Arrangement Act (CCAA). The latter targets reorganization while the BIA focuses on both reorganization and liquidation. This paper examines the factors that enter into the choice of either of these two regimes by bankrupt filing public firms. We document that firms are more likely to file under the CCAA when the global stock market is bullish. Larger firms, more leveraged firms and firms with higher quality bankruptcy trustees are more likely to file under CCAA. The worst performing firms also tend to file under the CCAA. Finally firms in Ontario and Quebec have a tendency to file more frequently under the BIA compared to other provinces.

Keywords: Bankruptcy; Bankruptcy protection; Legal framework; Logistic regression (search for similar items in EconPapers)
JEL-codes: G11 G12 K22 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:42:y:2017:i:c:p:161-172

DOI: 10.1016/j.ribaf.2017.04.043

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