CFA Institute Releases Empirical Study on Factors Influencing Post-Bankruptcy Restructuring Stock Returns

The CFA Institute Research and Policy Center has released an empirical study examining 145 U.S. companies that underwent Chapter 11 bankruptcy restructuring between 2002 and 2016. The study found that balance sheet and restructuring process variables explained only 2% to 4% of the variation in stock returns during the three years following restructuring, with no statistical significance, making them unreliable predictors of returns. Industry differences had a far greater impact on returns than balance sheet quality. The materials sector outperformed the S&P 500 by an average of 55%, while the utilities sector underperformed by an average of 85%, representing a return gap of approximately 140 percentage points across industries. The median three-year compound annual growth rate for pre-restructured companies was -22%, compared to -14% for companies undergoing conventional restructuring. The full paper and supporting data have been published on the SSRN platform.

AI-generated from reports · 2 hr agoUpdated

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