Table 1 - uploaded by Stijn Claessens
Content may be subject to copyright.
Summary Statistics on Bankruptcy Filings Middle Income is the average of Indonesia, Korea, Malaysia, Philippines, and Thailand. High Income is the average of Hong Kong, Japan, Singapore, and Taiwan.

Summary Statistics on Bankruptcy Filings Middle Income is the average of Indonesia, Korea, Malaysia, Philippines, and Thailand. High Income is the average of Hong Kong, Japan, Singapore, and Taiwan.

Source publication
Article
Full-text available
The widespread financial crisis in East Asia caused large economic shocks, which varied by degree across the region. That crisis provides a unique opportunity for investigating the factors that determine the use of bankruptcy processes in a number of economies. The authors study the use of bankruptcy in Hong Kong, Indonesia, Japan, the Republic of...

Contexts in source publication

Context 1
... the legal definition of bankruptcy is not consistent across the region, we used as a minimum standard that firms filed for legal creditor protection. 3 Table 1 provides descriptive statistics of our sample. ...
Context 2
... Japan, however, we have about the same number of firms listed for each country, about 300 firms on average, except for the Philippines (68 firms). As shown in Table 1, in absolute terms and as a percentage of total firms, the largest number of bankruptcies occurred in Thailand, Korea, and Malaysia; the smallest number of bankruptcies occurred in the Philippines, Singapore and Taiwan. As reported in our summary statistics, middle- income countries in the region (Indonesia, Korea, Malaysia, Philippines, and Thailand), which typify less developed financial markets and business law, account for 80% of reported bankruptcies. ...
Context 3
... results are reported in the last two columns of Table 1. We find that the principal shareholders in the majority of East Asian firms are other commercial firms, not-for-profit foundations, and financial institutions. ...

Similar publications

Article
Full-text available
The recent financial crisis in East and Southeast Asia raises a question of whether or not financial development promotes economic growth. This study attempts to provide further evidence on this issue with the time-series and panel data for eight East and Southeast Asian countries (China, Indonesia, Japan, Korea, Malaysia, Philippines, Singapore, a...
Article
Full-text available
Abstract The aim of this mini review paper is to discuss and studies on distribution and behavior of the rare earth element in the South China Sea water. The geological and location settling is covered by a few countries which including Asean Zone and North east Asia. Several Asean countries which were Malaysia, Singapore, Brunei, Indonesia, Phili...
Article
Full-text available
This study analyzes the relationship among exchange rate (against US dollar), interest rate, government bond and the stock market in three ASEAN countries consisting of Thailand, Malaysia, Singapore and three East Asia countries comprising Japan, Korea, and China. The paper analyzes the question whether there exist a correlation between these varia...
Article
Full-text available
In last quarter of 1997, the economic crises came in the East Asian countries. However, the countries those are affected by these crises are Malaysia, South Korea, Indonesia, Japan, Philippians, Thailand and Taiwan. The reason behind these crises were due to miss management of economic system and bankruptcy because mostly bank became corrupt during...

Citations

... Regarding empirical evidence, studies measuring the impact of efficient functioning of judicial institutions on the use of formal mechanism to resolve financial distress are scarce. The investigations by Claessens et al. (1999Claessens et al. ( , 2001Claessens et al. ( , 2003 were pioneering in this field; in an analysis of the firms listed on the stock exchange in Asia, the authors demonstrated that an improved judicial efficiency related to aspects such as speed, cost, and ease of procedures, has an impact on the behaviour of creditors. In more efficient judicial systems, creditors are more inclined to push companies towards using legal procedures in case of failure. ...
... Additionally, the results are also in line with García-Posada and Mora Sanguinetti (2012b), who suggested that in the process of insolvency resolution, out-of-court agreements and foreclosures are more attractive due to the inefficiency of the court system, which could partially explain low use of formal bankruptcy proceedings in Spain. Similarly, the results are in line with those obtained by Claessens et al. (1999Claessens et al. ( , 2001 and Claessens and Klapper (2005), although these were carried out at the international level. ...
Article
Full-text available
In the framework of law and finance literature, this study focuses on analysing the impact of judicial efficiency in firms’ decision on the use of court proceedings in the resolution of financial distress. The question as to whether the use of formal bankruptcy procedures can be related to efficiency in the implementation of legislation by the courts has been posed. The scarce empirical evidence has focused on the analysis of the impact of judicial efficiency at the international level, which implies assumption that the degree of efficiency is similar within each country. However, studies from Brazil and Spain have revealed the existence of differences among districts within the same country and its impact on different economic and financial aspects. Consequently, the work focuses on a single country allowing to isolate the effect of the content of the legislation from the efficiency of the application of these legal rules by the courts. The sample consists of 4160 unlisted firms in Spain experiencing financial difficulties, among which are companies that have and have not opted to use the formal bankruptcy proceedings. The results indicate that firms located in Spain’s autonomous communities that exhibit a higher efficiency of their judicial systems are more likely to use court proceedings to resolve financial distress.
... Porta et al, 1997 ) . Claessens, Djankov, and Klapper, 1999 ) . Silanes et al, 2000 ) . ) . ...
Article
Full-text available
Corporation as a legal entity is distinct from its founders. This separation enables a business to either flourish or fail separately from the personal assets and interests of its members (whether owners, directors or employees). The advantages of untying a business from its founders are such that the corporation has today become the most common form of commercial entity around the world. But the separation also creates risks. Without a proper structure and allocation of duties and rights, and without clarity in decision-making processes, corporations can quickly become incapable of generating any wealth. Without adequate safeguards, corporations can become vulnerable to abuse, with insiders using corporate assets for personal gain to the detriment of other stakeholders. If such abuses become widespread in an economy, they can deter investors from participating in any corporation. The quality of the rules and regulations governing corporations is therefore fundamental to functioning markets and wealth-generating economic activity. In this study, we answer the following question: Does improving the protection of minority shareholders affect the value of capital markets in different countries? To answer this question, by using data from the World Bank shareholder protection index, we estimate the effect of protecting minority shareholders on the size of capital market in 27 countries (upper middle income countries, including Iran) for 2006 to 2012. The results show that the legal protection of minority shareholders has positive effect on the capital markets.
... Faccio et al. (2001) and Filatotchev et al. (2005) find that family firms with high level of ownership concentrations lead to expropriation of minority shareholder interests. Claessens et al. (1999) and Claessens et al. (2000) find that the ownerships in East Asian markets are highly concentrated, where voting rights frequently exceed cash-flow rights via pyramid structures and cross-holdings. Among the East Asian countries in their studies, listed firms in Hong Kong and Taiwan are predominantly controlled by families. ...
Article
Full-text available
The aim of this paper is to examine how concentrated ownership structures affect the positive association between industry competitions and pay-performance sensitivities. This is an empirical study to analyze the data from four East Asian markets (China, Hong Kong, Singapore and Taiwan) during 2001-2006. According to the literature review, this is the first paper to find that industry competitions do not play a governance role when firms are controlled by families or states. These findings enhance our understandings on the association between industry-and firm-level governance mechanisms.
... Hong Kong is chosen for the study because it is a mixture of the West and East. On one hand, it has the characteristics of the less developed markets, such as highly concentrated ownership via pyramid structures, cross-holdings and deviations from one-share-one-vote rules (Claessens et al. 1999). On the other hand, the legal system and corporate governance policies in Hong Kong are highly influenced by the developed markets; where the social and economics characteristics in many developed markets can be found in Hong Kong, such as the low corruption rate and welldeveloped financial market structure. ...
... Cheng and Firth (2005) also conclude that in a family ownership dominated market; institutional investors help to restrain executive pay. Claessens et al. (1999) and Claessens et al. (2000) find that the ownership in East Asian markets is highly concentrated, where voting rights frequently exceed cash-flow rights via pyramid structures and cross-holdings and two-thirds of firms are controlled by a single shareholder. Among the East Asian countries, listed firms in Hong Kong are predominantly controlled by families. ...
Article
Full-text available
The aim of this paper is to examine how family businesses and non-family businesses pay their CEOs differently and the role corporate governance plays in the process. This is an empirical study to analyze the data of 400 listed firms on the Hong Kong Stock Exchange Main Board Market during 2005-2007. Multiple regression analysis is applied to examine the relationships among family firms, executive pay and corporate governance mechanisms. The empirical results show that compared with non-family businesses, family businesses tend to grant more fixed compensation and less performance-based pay to their CEOs. Besides, when the CEOs are also the chairmen of the boards in family businesses, they get more fixed compensation. According to the literature review, this is the first study to examine the identity of the remuneration committee chairman as a proxy for the independence level of the committee. We found that assigning INED to chair the remuneration committee and increasing the percentage of INED on the committee help to restrain fixed compensations and encourage performance-based pay in family businesses.
... They find that legal origin, creditor rights and the nature of the financial system all play an important role in determining the level of risk that a firm is willing to hold. And Claessens, Djankov and Klapper (1999) studies the extent to which distressed firms exploit bankruptcy in order to resolve their problems and the factors, both corporate and institutional, that influences the bankruptcy decision. They find that ownership structure and creditor rights are important determinants of the use of bankruptcy. ...
Article
Full-text available
This paper examines the impact of macro fluctuation on firm’s balance sheet to understand firm’s net worth as well as the corporate distress probability. We argue that debt policies could be pro-cyclical, since it enhances corporate distress risk when currency depreciation comes.
... irms sought the assistance of the debt-restructuring process. About half of them resulted in formal agreements. In Korea and Malaysia, restructuring procedures have been more successful. Government encouragement led to a high incidence of restructuring while Malaysia added new procedures to alredy functioning bankruptcy and restructuring processes. Claessens et al (2000) reports figures for the post crisis resolution of bankruptcy proceedings in three Asian crisis countries; Indonesia, the Philippines and Thailand. The three countries were characterized as extremely or very debtor friendly above. To a large extent they were categorized this way because of the ineffectiveness and unpredictability of lega ...
Article
Failure of projects and firms are an inherent element of growth. Economic growth requires that old activities are phased out to make room for new ones, and that economic resources are reallocated from activities that are no longer profitable. In an economy where most firms are financed by debt to a substantial extent, insolvencies inevitably play an important role in restructuring. Insolvency leads to formal bankruptcy when legal procedures are employed to liquidate the insolvent firm’s assets in order to pay stakeholders fully or partially according to a priority established in law or contracts. In some countries legal procedures exist for restructuring as well as for liquidation. In other countries the restructuring of an insolvent firm is handled informally through negotiation. The economic roles of insolvency procedures are discussed (in Section 2) with an emphasis on dynamic aspects. In discussing the efficiency of insolvency procedures (in Section 3) we distinguish between ex ante and ex post efficiency. Since efficiency ultimately must be evaluated in terms of its dynamic effects, simple efficiency criteria are not easily identified. Formal insolvency procedures in different countries are classified (in Section 4) as more or less creditor or debtor oriented. Legal approaches can also be classified as more or less contractual or statutory. The important interdependence between formal and informal procedures is discussed in Section 5.Thereafter we turn in Section 6 to the empirical evidence on bankruptcy and restructuring in a number of countries with substantial differences in legal approaches to insolvency. We ask in Section 7 what explains the relatively high bankruptcy frequency in Sweden in an international comparison. Is the high frequency an indication of efficiency of procedures or does it indicate that viable firms are forced into bankruptcy unnecessarily?
... These, in turn, will translate into lower stock prices and a weaker exchange rate. In addition, Claessens et al. (1999) observed from East Asia that bank-relationships provide insurance against insolvency and bankruptcy during bad times, at the cost of increased cost of capital during good times. They also showed the importance of legal origins: Filings are more likely in countries with German-oriented systems, which have stronger contractability and creditors rights, and less likely in French-origin systems, which have weaker creditor rights. ...
Article
Prior empirical evidence supports the wealth expropriation hypothesis that weak corporate governance induced by certain types of ownership structures and board composition tends to result in minority interest expropriation. This in turn reduces corporate value. However, it is still unclear whether corporate financial distress is related to these corporate governance characteristics. To answer this question, we adopt three variables to proxy for corporate governance risk, namely, the percentage of directors occupied by the controlling shareholder, the percentage the controlling shareholders shareholding pledged for bank loans (pledge ratio), and the deviation in control away from the cash flow rights. Binary logistic regressions are then fitted to generate dichotomous prediction models. Taiwanese listed firms, characterised by a high degree of ownership concentration, similar to that in most countries, are used as our empirical samples. The evidence suggests that the three variables mentioned above are positively related to the risk for financial distress in the following year. Generally speaking, firms with weak corporate governance are vulnerable to economic downturns and the probability of falling into financial distress increases. Copyright Blackwell Publishing Ltd. 2004.
... They have been considered by others concerned with the need of effectively enforcing other types of rules. However, these papers deal with different issues, such as the rate of bankruptcies (Claessens et al. (1999)), currency depreciation and change in the stock market in emerging markets after the Asian crisis ( Johnson et al. (2000)) and the number of mergers and acquisitions (Rossi and Volpin (2001)). With the only exception being the changes in the stock market value, the interaction between commercial rules and enforcement tends to be positive and significant in explaining the behaviour of these variables. ...
Article
The Law and Finance literature sees the financial sector as a source of growth and legal institutions as a significant determinant of financial sector development. Most research in this field does not consider the nature of the relationship between legal institutions and the measure of financial sector development used. They do not consider the underlying structural relationship between legal institutions and financial sector development. It is the argument of this paper that the nature of this structural relationship has major implications for policy-makers. To demonstrate this we utilise a widely used data set. We use a more general specification of the relationship between legal institutions and the extent of financial development and estimate it in the context of a system of equations which is estimated equation by equation. This approach highlights the relevance of the specification of the relationships for policy-making. It also puts it in a context where it has already been shown that legal institutions have a significant impact on economic growth. The results differ from those implied by earlier work in that the size of the capital market component of the financial sector is found to be strongly influenced by the interaction of investor protection laws with the quality of legal enforcement. This is an important result from the perspective of policy-making. The implication of it is that for countries with low levels of enforcement focusing on improving investor protection laws does not necessarily contribute to increasing the size of the stock market (and hence growth). For such countries the main priority should be improved enforcement within the legal system and creditor protection. Given the high correlation between the quality of law enforcement and the level of development, these are likely to be developing countries. This cautions against concentrating on reform of commercial laws rather than developing the effectiveness of the legal system. Our results also suggest that at high levels of enforcement there is little to be gained (in this context) from further improvements in the level of enforcement.
... The East Asian financial crisis has not only caused a large shock to economies across the region but also brought out economic inefficiencies all over the region. Consequently, many of financial institutions as well as non-financial corporations have been in distress (Claessens et al., 1998 and2000a;Krugman, 1998). ...
Article
Full-text available
This paper investigates the ownership and control of Thai public firms in the period after the East Asian financial crisis, compared to those in the pre-crisis period. Using the comprehensive unique database of ownership and board structures, we find that the ownership and control appear to be more concentrated in the hands of controlling shareholders subsequent to the crisis. Interestingly, even though families remain the most prevalent owners of Thai firms and are still actively involved in the management after the financial crisis, their role as the controlling shareholder becomes less significant. In addition, our results show that direct shareholdings are most frequently used as a means of control in both periods. Pyramids and cross-shareholdings, however, are employed to the lesser extent following the crisis.
... Aucune restriction directe de ce type n'existe au Japon ou dans les pays membres de la CEE [M.Berlin 2000].16 Dans le même sens, S.Claessens et al. [1999] montrent sur plusieurs pays de l'Asie du sud-est que les banques détenant une partie du capital d'entreprises en difficulté semblent réticentes à provoquer une faillite formelle.interprétation alternative. ...
Article
Full-text available
During the last decade, there was a growing body of case law of lender liability in the United States and France. This doctrine, whose prime goal is to protect investors against opportunism by banks, limits the involvement of banks in the management of commercial firms. This article explores the consequences of this doctrine of lender liability. We ask three questions: what is the "dark side" of relationship banking? Why do we see such variation across countries concerning lender liability? Is the lender liability doctrine efficient?