Industry Peer Information and the Equity Valuation Accuracy of Firms Emerging from Chapter 11
研究发现行业同行信息能显著降低第11章破产重整企业的股权估值错误，减少债权人之间的财富转移，并改善企业重组后的财务表现。
Valuation plays a central role in determining Chapter 11 reorganization outcomes. However, obtaining accurate valuation estimates of reorganized firms is challenging because of limited firm-specific market-based information and the oft-conflicting incentives of claimholders. We examine the role of industry peer information in reducing misvaluations and its implications for unintended interclaimant wealth transfers and postreorganization performance. First, we find that the availability of relevant industry peer information is negatively associated with equity valuation errors for firms emerging from Chapter 11. Cross-sectional results suggest that the relation between industry peer information and valuation errors varies substantially with debtors’ information environment and case characteristics. Second, we find that industry peer information quality is associated with better ex post financial performance of emerged firms because of lower overvaluation. Finally, we document the role of industry peer information in substantially reducing the frequency and magnitude of unintended wealth transfers between claimants arising from equity valuation errors. This paper was accepted by Suraj Srinivasan, accounting. Funding: The authors appreciate financial support from the Social Sciences and Humanities Research Council of Canada [Grant 435-2020-0583] and the Canadian Academic Accounting Association. B. Fang acknowledges financial support from the Della Suantio Fellowship. Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2022.01233 .