The CEO and corporate bankruptcy

By Sigrid Folkestad

24 May 2016 10:34

(updated: 24 May 2016 10:59)

The CEO and corporate bankruptcy

The paper «How Costly is Corporate Bankruptcy for the CEO?» has been published in Journal of Financial Economics.

Finance Professor Karin S. Thorburn, NHH.

Professor Karin S. Thorburn at NHH, Professor B Espen Eckbo at Tuck School of Business at Dartmouth and Adjunct Professor at NHH have together with Wei Wang, Associate Professor at Queen's School of Business written the paper.

The authors provide some first systematic estimates of the personal career and financial effects for top executives when the company they are leading goes bankrupt. The estimates are based on 322 large public companies filing for Chapter 11 bankruptcy between 1996 and 2007.

The study provides evidence on the following three questions:

  • What happens to CEOs’ careers when their firms file for bankruptcy?
  • Do top executives experience large personal income losses?
  • Do founder status and creditor control rights influence the probability of CEO departure and the income loss?

Journal of Financial Economics is one of the leading journals within the field of finance. It is included on the NHH bonus list. Researchers from NHH who publish in these journals receive a publication bonus of NOK 80,000.

How costly is corporate bankruptcy for the CEO 

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