Financial Distress, Corporate Restructuring and Firm Survival: An Empirical Analysis of German Panel Data (Beiträge zur betriebswirtschaftlichen Forschung (116))

The economic ramifications of corporate financial distress and bankruptcy have recently gained much attention in academic as well as public policy debates. But empirical evidence on how firms encounter and respond to distress has remained sparse and inconclusive. Philipp Jostarndt analyzes the anatomy of financial distress for a large sample of German corporations. He studies distress-induced changes in ownership and control, success factors in distressed equity infusions, and firms’ choice between in- and out-of-court debt restructurings. Moreover, he conducts a survival analysis to examine the determinants of survival, acquisition, and bankruptcy as alternative paths to exit financial distress. He includes both the firm perspective as well as the market valuations of the undertaken restructurings and, where applicable, relates the findings to the microstructure of Germany’s revised bankruptcy legislation. Research on corporate distress and bankruptcy and the accompanying e?orts of?rms to restructure their operations and balance sheets have become an increasingly important?eld in?nancial economics and business administration. Especially in Germany where the recent period of economic downturn and large-scale bankruptcy?lings coincided with extensivereformsofthebankruptcylegislationthetopichasenjoyedcontroversialdebates among economists, legal scholars and public policy makers. Yet so far insights from empirical research that can provide valuable guidance in these debateshaveremainedsparseandinconclusive. Onereasonforthelackofevidenceisthat common?nancial theory on corporate restructuring is not fully compatible with the G- man institutional background and thus often allows only ambiguous predictions. Mo- over, empiricalinvestigationsofGermanrestructuringshavesofarbeenalmostimpossible due to the lack of exhaustive data. This holds in particular for private reorganizations, which present the predominant form of restructuring distressed?rms in Germany. Many economically highly interesting aspects pertain to this?nal stage in the corporate li- cycle. Forexample,thequestionwhetherthe?rm'smanagement,shareholdersorcreditors should trigger a formal bankruptcy proceeding or, alternatively, pursue a going-concern in an out-of-court workout has a myriad of economic implications. Philipp Jostarndt studies distress-induced changes in ownership and control, success factors in distressed equity infusions, and firms’ choice between in- and out-of-court debt restructurings. In addition, he analyzes the determinants of survival, acquisition, and bankruptcy as alternative paths to exit financial distress. He includes both the firm perspective as well as the market valuations of the undertaken restructurings and, where applicable, relates the findings to the microstructure of Germany’s revised bankruptcy legislation. Front Matter....Pages I-XVII Introduction....Pages 1-9 Data selection and sample descriptives....Pages 11-23 Financial distress, corporate control, and management turnover: A German panel analysis....Pages 25-70 Of bail-outs and bankruptcies: An empirical study of distressed debt restructurings in Germany....Pages 71-126 Claimholder conflicts in distressed equity offerings: Evidence from German restructurings....Pages 127-161 A study of firm exit and survival in financial distress....Pages 163-198