Stocks of Firms under Reorganization Procedure

Abstract

This paper aims to analyze the market reaction of US firms following their reorganization procedure announcement. As a first step, an analysis of stock prices of a sample of U.S. companies having filed for chapter 11 during the period 2000-2012 is carried through the use of indexes of prices. As a second step, we compare the stock prices of these firms with the ones of "similar" firms that have not been affected by this type of event. The results report a lower average stock return of companies under judicial protection throughout the considered time horizon, except for the period 2008-2009.