TY  - JOUR
AU  - Gan,Li
AU  - Sabarwal,Tarun
TI  - A Simple Test of Adverse Events and Strategic Timing Theories of Consumer Bankruptcy
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 11763
PY  - 2005
Y2  - November 2005
UR  - http://www.nber.org/papers/w11763
L1  - http://www.nber.org/papers/w11763.pdf
N1  - Author contact info:
Li Gan
Department of Economics
Texas A&M University
College Station, TX 77843-4228
Tel: 979/862-1667
Fax: 979/847-8747
E-Mail: gan@econmail.tamu.edu

Tarun Sabarwal
University of Kansas
E-Mail: sabarwal@ku.edu
AB  - A test of adverse events and strategic timing theories can be conducted by determining whether some relevant financial decision variables, such as financial benefit from filing for bankruptcy, or debt discharged in bankruptcy are endogenous with the bankruptcy decision or not. For the strategic timing theory such decisions are endogenous, while for the adverse events theory they are not. Hausman tests for endogeneity show that financial benefit, unsecured debt, and non-exempt assets are exogenous with the bankruptcy decision, consistent with the adverse events theory.
ER  -