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Accession Number PB2013-111009
Title Human Capital Loss in Corporate Bankruptcy.
Publication Date Jul 2013
Media Count 38p
Personal Author H. Kim J. Qiu J. R. Graham S. Li
Abstract This paper quantifies the human costs of bankruptcy by estimating employee wage losses induced by the bankruptcy filing of employers using employee-employer matched data from the U.S. Census Bureau's LEHD program. We find that employee wages begin to deteriorate one year prior to bankruptcy. One year after bankruptcy, the magnitude of the decline in annual wages is 30% of pre-bankruptcy wages. The decrease in wages persists (at least) for five years post-bankruptcy. The present value of wage losses summed up to five years after bankruptcy amounts to 29-49% of the average pre-bankruptcy market value of firm. Furthermore, we find that the ex-ante wage premium to compensate for the ex-post wage loss due to bankruptcy can be of similar magnitude with that of the tax benefits of debt.
Keywords Bankruptcy
Costs
Employees
Financial losses
Human capital
Liabilities
Market value
Taxes
Wages


 
Source Agency Department of Commerce, Bureau of Census
NTIS Subject Category 96 - Business & Economics
96A - Domestic Commerce, Marketing, & Economics
70D - Personnel Management, Labor Relations & Manpower Studies
Corporate Author Duke Univ., Durham, NC.
Document Type Technical report
Title Note N/A
NTIS Issue Number 1324
Contract Number N/A

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