CIFRA UvA Finance Seminars: Ben Iverson (Brigham Young University)
Trade Creditors’ Information Advantage
Using information on the sales of debt claims for 132 U.S. Chapter 11 bankruptcy cases, we show that large trade creditors’ decisions to sell receivables of a distressed company in bankruptcy are predictive of lower recovery rates, and that in such cases these creditors sell ahead of less informed suppliers.
This result is strongest for more opaque distressed firms, when trade creditors’ information advantage is likely largest. This evidence shows that suppliers that extend significant amounts of trade credit hold private information about their trade partners. Trade creditors who are geographically closer or in similar industries tend to lend the most, suggesting that these are two channels through which suppliers hold an information advantage.
The seminar will be held in room M 0.01
Roeterseilandcampus - building M
Plantage Muidergracht 12 | 1018 TV AmsterdamGa naar detailpagina
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