Ciliberto, Federico and Schenone, Carola (2010): Are the Bankrupt Skies the Friendliest?
Preview |
PDF
MPRA_paper_24915.pdf Download (264kB) | Preview |
Abstract
We use data from the US airline industry to investigate whether firms that are under bankruptcy protection, as well as these firms' product market rivals, change the quality of the products they offer. We measure the quality of the services offered by a carrier using flight cancellations and delays, and the age of the aircraft used by the carrier. We find that delays and cancelations are less frequent during bankruptcy filings but return to their pre-bankruptcy levels once the bankrupt firm emerges from bankruptcy. We also find that firms use Chapter 11 filings to permanently reduce the age of their fleet. We do not find evidence of statistically and economically significant changes by the airline's competitors along any of the dimensions above.
Item Type: | MPRA Paper |
---|---|
Original Title: | Are the Bankrupt Skies the Friendliest? |
Language: | English |
Keywords: | Bankruptcy, Chapter 11, Product Market Quality, Airline Industry |
Subjects: | K - Law and Economics > K2 - Regulation and Business Law G - Financial Economics > G3 - Corporate Finance and Governance L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance |
Item ID: | 24915 |
Depositing User: | Federico Ciliberto |
Date Deposited: | 16 Sep 2010 11:36 |
Last Modified: | 30 Sep 2019 17:39 |
References: | [1] Ashenfelter, Orley, 1978, Estimating the E¤ect of Training Programs on Earnings, The Review of Economics and Statistics (60) 1: 47-57. [2] Berry, Steven, 1990, Airport Presence as Product Di¤erentiation, American Economic Review Papers and Proceedings (80) 2: 394-399. [3] S. Berry and P. Jia , �Tracing the woes: An empirical analysis of the airline industry. MIT, Working Paper, 2010 [4] Bris, Arturo, Ivo Welch, and Ning Zhu, 2006, The Costs of Bankruptcy, The Journal of Finance (61): 1253-1303. [5] Jan K. Brueckner & Nichola J. Dyer & Pablo T. Spiller, 1992. �Fare Determination in Airline Hub-and-Spoke Networks,�RAND Journal of Economics, The RAND Corporation, vol. 23(3), pages 309-333, Autumn. [6] Chevalier, Judith, 1995a, Do LBO Supermarkets charge more? An empirical analysis of the e¤ects of LBO on supermarket pricing, Journal of Finance (50): 1095-1112. [7] Chevalier, Judith, 1995b, Capital Structure and Product-Market Competition: Empirical Evi- dence from the Supermarket Industry, American Economic Review (85): 415-435. [8] Chevalier, Judith, and Scharfstein, David, 1995, Liquidity Constraints and the Cyclical Behavior of Markups, American Economic Review (85): 390-396. [9] Ciliberto, Federico, and Carola Schenone, 2009, Bankruptcy and Product-Market Competition: Evidence from the Airline Industry, Working Paper, University of Virginia. [10] Dasgupta, Sudipto, and Sheridan Titman, 1998, Pricing Strategy and Financial Policy, Review of Financial Studies (11): 705-737. [11] Franks, Julien R., and Walter N. Torous, 1989, An empirical investigation of U.S. �rms in reorganization, Journal of Finance (44): 747-769. [12] Fresard, Laurent, forthcoming, Financial Strength and Product Market Behavior: The Real E¤ects of Corporate Cash Holdings, Journal of Finance. [13] Friedberg Leora, 1998, Did Unilateral Divorce Raise Divorce Rates? Evidence from Panel Data, American Economic Review ( 88) 3 : 608-627 [14] Holmes, George, M., and Nicholas Rupp, 2006, An Investigation Into the Determinants of Flight Cancellations, Economica. (73): 749-784. [15] Li, Wei , Marc Lipson, Kamalini Ramdas, and Jonathan Williams, 2009, Can Stock Price Move- ments Inform Operational Improvements E¤orts? Evidence from the Airline Industry,University of Virginia Working Paper. [16] Mayer, Christopher and Sinai Todd, 2003, Network E¤ects, Congestion Externalities, and Air Tra¢ c Delays: Or Why Not All Delays Are Evil, American Economic Review (93) 4: 1194�1215. [17] Mazzeo, Michael , 2003, Competition and Service Quality in the US Airline Industry, Review of Industrial Organization (22): 275-296. [18] Oliver Richard, 2003, Flight Frequency and Mergers in Airline Markets, International Journal of Industrial Organization (21): 907-922. [19] Opler, Tim, and Sheridan Titman, 1994, Financial Distress and Corporate Performance, Journal of Finance (49): 1015-1040. [20] Ramdas, Kamalini, and Jonathan Williams, 2007, Putting Queuing Theory Fundamentals to Work: An Investigation into the Causes of Airline Flight Delays, University of Virginia, Working Paper. [21] Ramdas, Kamalini, and Jonathan Williams, 2009, An Empirical Investigation into the Tradeo¤s that Impact On-Time Performance in the Airline Industry, University of VirginiaWorking Paper. [22] Rupp, Nicholas, D. Owens, and L. Plumly, 2006, Does Competition In�uence Airline On-time Performance, Advances in Airline Economics: Competition Policy and Antitrust, ed. D. Lee. [23] Thorburn, Karin S., 2000, Bankruptcy Auctions: Costs, Debt Recovery and Firm Survival, Journal of Financial Economics (40): 337-368. [24] Veerbek, M. and T. Nijman, 1992, Testing for Selectivity Bias in Panel Data Models, Interna- tional Economic Review (33) 3: 681-703. |
URI: | https://mpra.ub.uni-muenchen.de/id/eprint/24915 |
Available Versions of this Item
- Are the Bankrupt Skies the Friendliest? (deposited 16 Sep 2010 11:36) [Currently Displayed]