Control benefits and CEO discipline in automatic bankruptcy auctions ∗

  • Karin S. Thorburn, Amos Tuck
  • Published 2002


In Sweden, a bankruptcy filing automatically terminates CEO employment and places the firm in an open auction. This has prompted warnings of strong shareholder risk-shifting incentives to delay filing (”go for broke”). However, during severe distress, equity incentives are weak while CEO incentives to preserve private benefits of control are strong. We show… (More)