Firm Finance and Bankruptcy on Empirical Study Using Korean Firm-Level Data

80 p.Thesis (Ph.D.)--University of Illinois at Urbana-Champaign, 2004.The second paper estimates both bankruptcy costs and the debt recovery rate under the "Korean Bankruptcy Act". We analyze a sample of Korean business bankruptcies, which contains a total of 40 bankruptcy cases that formally closed. We obtain the following results: (i) The median bankruptcy cost standardized by assets at pre-filing under the "Korean Bankruptcy Act" is 4.6 percent. (ii) The median debt recovery rate standardized by assets at pre-filing under the "Korean Bankruptcy Act" is 57 percent while the median of shortfall is 43 percent. (iii) The median time in the "Korean Bankruptcy Act" is 924 days which is much longer than that in U.S. Chapter #7. (iv) There is a scale effect, i.e., the bankruptcy costs are inversely related to the size of firm. These results serve as legal parameters of the model and are crucial to study the optimal firm finance.U of I OnlyRestricted to the U of I community idenfinitely during batch ingest of legacy ETD