An Empirical Study of Corporate Bailouts from Around the World: 1987–2005

50 Pages Posted: 18 Feb 2010 Last revised: 19 Oct 2010

See all articles by Zhan Jiang

Zhan Jiang

affiliation not provided to SSRN

Kenneth Kim

Tongji University - School of Economics and Management; SUNY at Buffalo - School of Management

Hao Zhang

Rochester Institute of Technology (RIT) - Saunders College of Business

Date Written: October 15, 2010

Abstract

Using a carefully hand–collected sample of 104 corporate bailouts from around the world, we empirically study corporate bailouts at the firm level. We classify corporate bailouts into different types and find some bailed–out firms recover better than others. First, firms that experience sudden declines in performance, as opposed to firms that suffer prolonged declines in performance, and firms that are only financially distressed but not economically distressed, recover better than other bailed–out firms. Second, firms that receive cash injections, especially in the form of equity as opposed to loans, recover worse than other bailed–out firms. Third, and perhaps not surprisingly, firms bailed out by the government recover worse than firms bailed out by other stakeholders. Each of these findings holds (i) in the presence of other findings in multiple regression models, (ii) when we compare bailed–out firms to non–bailed–out matching firms, and (iii) when we control for different types of sample selection bias. An event study on bailout announcements provides corroborating evidence to our performance recovery findings.

Keywords: corporate bailout

JEL Classification: G3, G34, G38

Suggested Citation

Jiang, Zhan and Kim, Kenneth A. and Zhang, Hao, An Empirical Study of Corporate Bailouts from Around the World: 1987–2005 (October 15, 2010). Available at SSRN: https://ssrn.com/abstract=1555066 or http://dx.doi.org/10.2139/ssrn.1555066

Zhan Jiang

affiliation not provided to SSRN ( email )

Kenneth A. Kim (Contact Author)

Tongji University - School of Economics and Management ( email )

Siping Road 1500
Shanghai, Shanghai 200092
China

SUNY at Buffalo - School of Management ( email )

Jacobs Management Center
Buffalo, NY 14222
United States

Hao Zhang

Rochester Institute of Technology (RIT) - Saunders College of Business ( email )

105 Lomb Memorial Dr.
Rochester, NY 14623
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
152
Abstract Views
1,089
rank
236,418
PlumX Metrics