In this study we estimate indirect bankruptcy costs for a recent sample of large corporate bankruptcies in the United States over the period, 1997 to 2004. We find indirect bankruptcy costs of approximately 2%, and of firm value in years -3, -2 and -1 relative to the year of bankruptcy announcement respectively. Together with the direct costs reported in Altman (1984), our results suggest total bankruptcy related costs around , and of firm value over the corresponding three years. | Is bankruptcy costly? Recent evidence on the magnitude and determinants of indirect bankruptcy costs
