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Publication Detailed Description
Journal Title
Journal of Business Finance and Accounting
Year (definitive publication)
2018
Language
English
Country
United States of America
More Information
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Abstract
We study how distress-oriented hedge funds (vulture funds) play an important role in the fresh start valuation of firms emerging from Chapter 11 reorganization. We find that loan-to-own vultures acquire debt positions of the distressed firm that grant dominant power in the bankruptcy negotiations, and they then use the discretion allowed by fresh start accounting to introduce valuation bias in their favor. We show that the strategic influence over fresh start values can create opportunities to increase vulture investors’ returns at the expense of other claim holders
Acknowledgements
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Keywords
Bankruptcy,Distress,Hedge fund,Reporting discretion,Valuation
Fields of Science and Technology Classification
- Economics and Business - Social Sciences
Funding Records
| Funding Reference | Funding Entity |
|---|---|
| PTDC/IIM-GES/3933/2012 | Fundação para a Ciência e a Tecnologia |
| UID/GES/00315/2013 | Fundação para a Ciência e a Tecnologia |
Contributions to the Sustainable Development Goals of the United Nations
With the objective to increase the research activity directed towards the achievement of the United Nations 2030 Sustainable Development Goals, the possibility of associating scientific publications with the Sustainable Development Goals is now available in Ciência-IUL. These are the Sustainable Development Goals identified by the author(s) for this publication. For more detailed information on the Sustainable Development Goals, click here.
