Abstract
What are the main factors leading distressed firms to sell assets in and out of bankruptcy court? What are the performance outputs for the distressed firms? Is it possible to identify fire sales, when assets are sold at a discount price compared to their fundamental values? In this chapter, we review major empirical findings about these issues in the literature, focusing on when distressed firms are forced to sell assets at a discounted price—i.e., in a fire sale—as opposed to being able to trade them at a fair price. We present empirical evidence about such fire sales vis-à-vis nonfinancial firms, banks, and security market intermediaries.
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