Resolving a Dilemma of Signaling Bankrupt-firm Emergence: A Dynamic Integrative View.

Kimberly Boal, David Dawley, Roon Ma, Han Jiang, Rong Ma

Research output: Contribution to journalArticle

Abstract

Predicting the emergence of bankrupt firms relying on firm signals involves a stigma-related dilemma. On the one hand, bankrupt firms tend to send positive signals through restructuring to decouple themselves from the stigma of bankruptcy. On the other hand, the preexistence of the bankruptcy stigma may reduce the signaling effectiveness of firms’ restructuring efforts, making the outcome prediction difficult. We address this dilemma by developing a dynamic integrative view to extend signaling theory, arguing that subsequent signals from key external stakeholders can effectively help evaluate bankrupt firms’ quality and reduce the ambiguity in interpreting firms’ restructuring signals. Using a sample of U.S. public bankrupt firms under Chapter 11 reorganization, we find evidence supporting the argument.
Original languageEnglish
JournalStrategic Management Journal
StatePublished - Jan 2016

Fingerprint Dive into the research topics of 'Resolving a Dilemma of Signaling Bankrupt-firm Emergence: A Dynamic Integrative View.'. Together they form a unique fingerprint.

  • Cite this