Abstract
This paper examines whether a petition for reorganization explains the stock market reactions of the surviving rivals. This paper further investigates key variables contributing to the cross-sectional variations in the magnitude of intra-industry co-movements of a reorganization petition, where industry- and firm-level factors are considered. Additionally, this paper attempts to evolve a fuzzy logic model and link it to the receiver operating characteristic (ROC) curve for analysis. The results reveal that, though marginally significant, competitive effects of filings outweigh contagion effects and that our fuzzy logic model and its ROC-based performance measure give good results and are applicable to the reorganization filing event.
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