The past decade has seen intense academic debates over
possible explanations for the different systems of
corporate ownership and control that exist in developed
economies. Yet the role of bankruptcy as a mechanism of
corporate governance has received relatively little
attention. Furthermore, many theories have failed to
account successfully for events occurring in the UK,
notwithstanding its similarity to the US. In response,
this paper offers an account of the complementarities
between bankruptcy law and ownership structure, which it
is argued can explain developments in both the UK and
the US. By identifying the effects of concentration or
dispersion in firms’ capital structure (across both
equity and debt), and by analysing implications of these
capital structure choices for bankruptcy, the paper
develops a richer account of the corporate governance
patterns we see in different nations. pdf
