CFE 2015: Start Registration
View Submission - CFE
A0765
Title: Bankruptcy survival: Evidence from France Authors:  Lara Abdel Fattah - Univerity of Paris Ouest Nanterre La Defense (France) [presenting]
Sylvain Barthelemy - TAC Economics (France)
Nadine Levratto - University of Paris Ouest Nanterre La Defense (France)
Benjamin Trempont - TAC Economics (France)
Abstract: Despite the strong emphasis of the French legislator to the reorganization and restructuring of distressed companies, only a small share of insolvent firms benefit from a reorganization. In addition, among the rescued companies a large majority of these attemps fail as attested by the important number of conversion of reorganization into liquidation. Earlier research has explored the relationship between business survival and a variety of cases or company characteristics. However, little is known on the effectiveness of such a decision in the French case. Using a newly available dataset, we are able to document for the first time the survival of companies that have benefited from reorganization. The novelty of our approach comes from the use of data-driven comprehensive models of those relationships. We seek to explore a double question. The first one concerns the difference between companies which are still operating 3 years after the decision of reorganization by the commerce court and those which have been liquidated. The second one explores the probability of liquidation 1, 2 and 3 years after the judgement. In other terms it analyses the variables that help in predicting the probability of success of a reorganization. To answer these questions we implement support vector machines and random forest.