Bankruptcy: An Examination of Different Approaches

Abstract

This chapter mentions etymology and history of bankruptcy and discusses serious bankruptcy-related problems such as measuring bankruptcy costs and predicting bankruptcies. The magnitude of bankruptcy costs is a critical issue in terms of capital structure theories. It has also crucial importance to predict probability of bankruptcy in the assessment of companies' creditworthiness. The enormous increase in large corporate failures in the last decades has revealed the importance of bankruptcy prediction and enforced to improve new techniques. The keystone studies of bankruptcy literature, different findings and views regarding problematic issues of bankruptcy are presented in this chapter. The inconclusive results of these studies indicate that bankruptcy will remain an attractive field for all parties of financial world.