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Empirical Estimates of Filtering Failure in Court‐Supervised Reorganization
Author(s) -
Fisher Timothy C.G.,
Martel Jocelyn
Publication year - 2004
Publication title -
journal of empirical legal studies
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.529
H-Index - 24
eISSN - 1740-1461
pISSN - 1740-1453
DOI - 10.1111/j.1740-1461.2004.00005.x
Subject(s) - plan (archaeology) , sample (material) , empirical research , type i and type ii errors , actuarial science , estimation , econometrics , business , computer science , economics , operations management , statistics , mathematics , management , history , chemistry , archaeology , chromatography
We present the first comprehensive empirical estimates of filtering failure in court‐supervised reorganization. Using a sample of 303 firms attempting reorganization in Canada during 1977–1988, we find that Type I errors (accepting a plan from a nonviable firm) are four times more likely to occur than Type II errors (rejecting a plan from a viable firm) and that the incidence of filtering failure is between 22 and 53 percent or 18 and 44 percent, depending on the definition of a firm's viability.