Does the bond market predict bankruptcy settlements?

Article Abstract:

This study shows the extent to which deviations from the absolute priority rule increase or decrease the bankruptcy emergence payoff to traded (i.e., usually junior claimants) bondholders. The data indicate that, on average, bondholders benefit, albeit slightly, from absolute priority rule (APR) violations. This paper also examines the degree to which the bond market, in the bankruptcy filing month, anticipates departures from the APR and other influences on the payoff to bondholders. In other words, we investigate the informational efficiency of the market for bankrupt bonds. Overall, despite the complex and lengthy nature of bankruptcy proceedings, the results support efficiency. (Reprinted by permission of the publisher.)

Research, Credit market, Credit markets, Bankruptcy

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Managerial share ownership and the stock price effects of antitakeover amendment proposals

Article Abstract:

Studies that test for an average stock price effect of antitakeover amendments present different results, disagreeing with respect to both the significance and the direction of the effect. This study determines whether effects can be identified when managerial share ownership and amendment type are considered. Results suggest a negative relation between managerial share ownership and the stock price reaction to all but fair price amendment proposals. (Reprinted by permission of the publisher.)

Analysis, Economic aspects, Prices and rates, Stocks, Employee ownership, Stock prices, Corporate anti-takeover measures, Antitakeover strategies, Financial research

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