Coalitions, the Me-First Rule, and the Liquidation Decision
Date
1980
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Wiley-Blackwell
Abstract
Conventional wisdom in economics recommends that a bankrupt firm with liquidation value greater than going-concern value be liquidated by the creditors and that a firm with going-concern value greater than liquidation value continue to operate. Recently, counterexamples to the traditional rule have been presented. This note argues that violation of the me-first rule is responsible for these counterexamples. Since violation of the me-first rule involves the absence of value-maximization on the part of some economic agents, economic theories concerned with rational behavior may justifiably still assume that the liquidation decision follows the traditional rule.
Description
Article deposited after permission was granted by publisher, 01/14/2011.
Keywords
Citation
Ang, J.S. and Chua, J. H. (1980), Coalitions, the Me-First Rule, and the Liquidation Decision, The Bell Journal of Economics, vol. 11, no. 1, pp.355-359.