Ivan Lavrov
Welcome to my website.
I am a PhD candidate at UCLA Economics Department. I specialize in Empirical Corporate Finance, Financial Economics and Macroeconomics.
I am on the job market in 2024-2025 year. In my job market paper, I study empirically the borrowing costs of previously bankrupt firms.
Contact me at ivanlavrov@ucla.edu or LinkedIn
Job Market Paper
Scarring Effects of Financial Distress: Evidence from Chapter 11 Reorganizations
Draft coming soon
Abstract Firms defaulting on their debt often do not go out of business, many of them reorganize through a Chapter 11 bankruptcy. Are their borrowing costs commensurate with their post-bankruptcy creditworthiness? I answer this question using a panel of credit spreads for large public US firms that emerged from Chapter 11 bankruptcy in 1998-2022 and show that surviving a bankruptcy has a scarring effect on the firms. I document that an improvement of the credit rating by one grade is associated with a smaller reduction in the borrowing costs for emergent firms than for comparable never-bankrupt firms, lasting for up to 12 months after the emergence from bankruptcy, but only for the relatively strong credit ratings of BB- and above. My findings suggest that the post-bankruptcy bond market is less efficient in distinguishing and rewarding the firms’ financial soundness, diminishing their incentives to rebuild the reputation of a solid debtor.