Finance | Corporate Finance | New Equity Performance Following Chapter 11 Emergence
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Journal of Business & Economics Research – August 2007 Volume 5, Number 8
91
New Equity Performance
Following Chapter 11 Emergence
Nicholas K.
Wold, Colorado College
Judith A.
Laux, (E-mail: jlaux@coloradocollege.
edu),...
[Plus]
Journal of Business & Economics Research – August 2007 Volume 5, Number 8
91
New Equity Performance
Following Chapter 11 Emergence
Nicholas K.
Wold, Colorado College
Judith A.
Laux, (E-mail: jlaux@coloradocollege.
edu), Colorado College
ABSTRACT
This body of research investigates how the performance of exchange-traded common equity from
firms in Chapter 11 bankruptcy emergence compares with common stock from non-bankrupt
competitors and recently public peers in short and long-term time horizons.
Return data are
gathered for a sample of sixteen financially restructured companies, each paired with two nondistressed industry competitors and one recently-public peer.
Using the Capital Asset Pricing
Model as a primary analytical tool, empirical tests show a positive correlation in equity returns
among the samples of restructured and non-distressed market competitors and a stock
underperformance from the sample of IPO competitors.
These results suggest that markets ar
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