The local effects of bankruptcy - ©AdobeStock_sas

What are the local impacts of firms being liquidated? In a new paper, Professors Bernstein, Colonnelli, Giroud and Iverson show that it negatively affects the activity of closely located firms, mainly through a reduction in consumer traffic and a decrease in knowledge spillover. As a consequence, judges should take into account those negative spillovers when deciding whether or not to liquidate a (...)

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