Ivan Lavrov
Welcome to my website.
I am a PhD candidate at UCLA Economics Department. I specialize in Applied 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
The Scarring Effect of Financial Distress: Evidence from Chapter 11 Reorganizations
Abstract Firms defaulting on their debt often do not go out of business. Instead, many of them reorganize through a Chapter 11 bankruptcy. Are their borrowing costs commensurate with their post-reorganization financial health? I answer this question by assembling a panel of 207 bonds from post-reorganization issuers and show that surviving a bankruptcy has a scarring effect on firms. Measuring financial health with credit ratings and borrowing costs with credit spreads, I document that in their first post-emergence year financially sound firms experience higher borrowing costs than comparable never-bankrupt firms, whereas vulnerable firms enjoy lower costs. My findings suggest that the post-reorganization bond market may be inefficient in distinguishing financially sound issuers and rewarding them with favorable borrowing costs, making it difficult to rebuild the reputation of solid debtors.