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  • October 1990
  • Article
  • Journal of Financial Economics

Bankruptcy, Boards, Banks, and Blockholders: Evidence on Changes in Corporate Ownership and Control When Firms Default

By: S. C. Gilson
  • Format:Print
  • | Pages:33
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Abstract

In 111 publicly traded firms that either file for bankruptcy or privately restructure their debt between 1979 and 1985, bank lenders frequently become major stockholders or appoint new directors. On average, only 46% of incumbent directors remain when bankruptcy or debt restructuring ends. Directors who resign hold significantly fewer seats on other boards following their departure. Common-stock ownership becomes more concentrated with large blockholders and less with corporate insiders. Few firms are acquired. Collectively, these results suggest that corporate default leads to significant changes in the ownership of firms' residual claims and in the allocation of rights to manage corporate resources.

Keywords

Insolvency and Bankruptcy; Governance; Banks and Banking; Change; Business Ventures; Ownership

Citation

Gilson, S. C. "Bankruptcy, Boards, Banks, and Blockholders: Evidence on Changes in Corporate Ownership and Control When Firms Default." Journal of Financial Economics 27, no. 2 (October 1990): 355–387.
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About The Author

Stuart C. Gilson

Finance
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