Investing in Financially Distressed Securities
Fricilone, J Paul
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This study evaluates the specific characteristics attributed to companies that enter Chapter 11 and emerge with their stock intact. While we find no statistically significant characteristics that uniquely identify such firms, the results suggest that a company that is more financially sound is more likely to retain its shareholders. Specifically, firms that emerge from Chapter 11 with their stock intact tend to have a higher return on assets and lower debt ratios.