Publication:
The Chrysler Effect : The Impact of the Chrysler Bailout on Borrowing Costs

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dc.contributor.authorAnginer, Deniz
dc.contributor.authorWarburton, A. Joseph
dc.date.accessioned2012-03-19T18:42:35Z
dc.date.available2012-03-19T18:42:35Z
dc.date.issued2010-10-01
dc.description.abstractDid the U.S. government's intervention in the Chrysler reorganization overturn bankruptcy law? Critics argue that the government-sponsored reorganization impermissibly elevated claims of the auto union over those of Chrysler's other creditors. If the critics are correct, businesses might suffer an increase in their cost of debt because creditors will perceive a new risk, that organized labor might leap-frog them in bankruptcy. This paper examines the financial market where this effect would be most detectible, the market for bonds of highly unionized companies. The authors find no evidence of a negative reaction to the Chrysler bailout by bondholders of unionized firms. They thus reject the notion that investors perceived a distortion of bankruptcy priorities. To the contrary, bondholders of unionized firms reacted positively to the Chrysler bailout. This evidence suggests that bondholders interpreted the Chrysler bailout as a signal that the government will stand behind unionized firms. The results are consistent with the notion that too-big-to-fail government policies generate moral hazard in the credit markets.en
dc.identifierhttp://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20101028130336
dc.identifier.doi10.1596/1813-9450-5462
dc.identifier.urihttps://hdl.handle.net/10986/3943
dc.languageEnglish
dc.relation.ispartofseriesPolicy Research working paper ; no. WPS 5462
dc.rightsCC BY 3.0 IGO
dc.rights.holderWorld Bank
dc.rights.urihttp://creativecommons.org/licenses/by/3.0/igo/
dc.subjectABSOLUTE PRIORITY RULE
dc.subjectACCOUNTING
dc.subjectASSET SALE
dc.subjectASSETS
dc.subjectBAILOUT
dc.subjectBAILOUTS
dc.subjectBALANCE SHEET
dc.subjectBANK MARKET
dc.subjectBANKRUPT
dc.subjectBANKRUPTCIES
dc.subjectBANKRUPTCY
dc.subjectBANKRUPTCY CODE
dc.subjectBANKRUPTCY COURT
dc.subjectBANKRUPTCY ESTATE
dc.subjectBANKRUPTCY LAW
dc.subjectBANKRUPTCY LAWS
dc.subjectBANKRUPTCY PRIORITIES
dc.subjectBANKRUPTCY PRIORITY
dc.subjectBANKRUPTCY PROCEEDINGS
dc.subjectBANKRUPTCY PROCESS
dc.subjectBANKRUPTCY PROTECTION
dc.subjectBANKRUPTCY REORGANIZATION
dc.subjectBANKRUPTCY RESOLUTION
dc.subjectBANKRUPTCY SYSTEM
dc.subjectBARGAINING POWER
dc.subjectBENEFICIARY
dc.subjectBOND
dc.subjectBOND INVESTORS
dc.subjectBOND MARKET
dc.subjectBOND MARKETS
dc.subjectBOND PRICES
dc.subjectBOND RETURNS
dc.subjectBOND SPREAD
dc.subjectBOND YIELDS
dc.subjectBONDHOLDER
dc.subjectBONDHOLDERS
dc.subjectBORROWING COSTS
dc.subjectBRIDGE LOAN
dc.subjectCAPITAL FLOWS
dc.subjectCAPITAL MARKETS
dc.subjectCDS
dc.subjectCLAIMANTS
dc.subjectCLASS OF CLAIMS
dc.subjectCLASSES OF CREDITORS
dc.subjectCLEAN PRICE
dc.subjectCOLLATERAL
dc.subjectCOLLECTIVE BARGAINING
dc.subjectCOLLECTIVE BARGAINING AGREEMENT
dc.subjectCOMMERCIAL LAW
dc.subjectCONCESSIONS
dc.subjectCONCESSIONS FROM CREDITORS
dc.subjectCONSUMER PRICE INDEX
dc.subjectCONVERTIBLE BONDS
dc.subjectCORPORATE BOND
dc.subjectCORPORATE BOND INDICES
dc.subjectCORPORATE BOND TRANSACTIONS
dc.subjectCORPORATE BONDS
dc.subjectCORPORATE DEBT
dc.subjectCORPORATE DEBTORS
dc.subjectCORPORATE INVESTMENT
dc.subjectCORPORATE YIELDS
dc.subjectCOST OF CAPITAL
dc.subjectCOST OF DEBT
dc.subjectCOUPON
dc.subjectCOUPON PAYMENT
dc.subjectCOUPON PAYMENTS
dc.subjectCOURT DECISIONS
dc.subjectCREDIT ENHANCEMENTS
dc.subjectCREDIT MARKET
dc.subjectCREDIT MARKETS
dc.subjectCREDIT RATING
dc.subjectCREDIT RISK
dc.subjectCREDIT SPREAD
dc.subjectCREDITOR
dc.subjectCREDITOR CLAIMS
dc.subjectCREDITOR CLASS
dc.subjectCREDITOR PRIORITIES
dc.subjectCREDITORS
dc.subjectDEBENTURE
dc.subjectDEBT
dc.subjectDEBT BURDEN
dc.subjectDEBT FINANCING
dc.subjectDEBT HOLDERS
dc.subjectDEBT MARKET
dc.subjectDEBT MARKET PARTICIPANTS
dc.subjectDEBTOR
dc.subjectDEBTORS
dc.subjectDEFAULT PREMIUM
dc.subjectDEFAULT PROBABILITY
dc.subjectDEFAULT RISK
dc.subjectDEPOSIT
dc.subjectDEPOSIT INSURANCE
dc.subjectDERIVATIVE
dc.subjectDISTRESSED DEBT
dc.subjectDISTRESSED SECURITIES
dc.subjectDUMMY VARIABLE
dc.subjectECONOMIC RECESSION
dc.subjectEMPLOYEE BENEFIT
dc.subjectEMPLOYEE RETIREMENT
dc.subjectEQUITABLE TREATMENT
dc.subjectEQUITY HOLDERS
dc.subjectEQUITY STAKE
dc.subjectESTATE
dc.subjectESTATES
dc.subjectEXCHANGE COMMISSION
dc.subjectFEDERAL RESERVE
dc.subjectFEDERAL RESERVE BANK
dc.subjectFINANCIAL CRISIS
dc.subjectFINANCIAL DISTRESS
dc.subjectFINANCIAL INSTITUTIONS
dc.subjectFINANCIAL MARKET
dc.subjectFINANCIAL MARKETS
dc.subjectFINANCIAL SHOCK
dc.subjectFINANCIAL STUDIES
dc.subjectFIRMS IN REORGANIZATION
dc.subjectFIXED INCOME
dc.subjectFIXED INCOME SECURITY
dc.subjectFLOATING INTEREST RATES
dc.subjectFORECLOSURES
dc.subjectFULL REPAYMENT
dc.subjectFUND MANAGERS
dc.subjectGOVERNMENT BAILOUT
dc.subjectGOVERNMENT BAILOUTS
dc.subjectGOVERNMENT INTERVENTION
dc.subjectGOVERNMENT INTERVENTIONS
dc.subjectGOVERNMENT INVOLVEMENT
dc.subjectGOVERNMENT POLICIES
dc.subjectGOVERNMENT REGULATION
dc.subjectGOVERNMENT SUPPORT
dc.subjectGROUPS OF CREDITORS
dc.subjectHIGH YIELD BONDS
dc.subjectHIGH-YIELD BONDS
dc.subjectHOLDING
dc.subjectIMPLICIT GOVERNMENT GUARANTEE
dc.subjectIMPLICIT GUARANTEE
dc.subjectINDEBTED
dc.subjectINDEBTEDNESS
dc.subjectINDIVIDUAL BOND
dc.subjectINSOLVENCY
dc.subjectINSURANCE
dc.subjectINSURANCE POLICY
dc.subjectINTANGIBLE
dc.subjectINTERNATIONAL BANK
dc.subjectINVESTMENT DECISIONS
dc.subjectJUNIOR CREDITORS
dc.subjectLABOR FORCE
dc.subjectLABOR UNION
dc.subjectLABOR UNIONS
dc.subjectLENDER OF LAST RESORT
dc.subjectLENDERS
dc.subjectLEVERAGE
dc.subjectLIEN
dc.subjectLIENS
dc.subjectLIQUIDATION
dc.subjectLIQUIDITY
dc.subjectLLC
dc.subjectLOAN
dc.subjectMARKET BEHAVIOR
dc.subjectMARKET CAPITALIZATION
dc.subjectMARKET DEVELOPMENT
dc.subjectMARKET DISCIPLINE
dc.subjectMARKET FOR BONDS
dc.subjectMARKET PLAYERS
dc.subjectMARKET RISK
dc.subjectMARKET TRANSPARENCY
dc.subjectMARKET VALUE
dc.subjectMARKET VALUES
dc.subjectMATURITIES
dc.subjectMATURITY
dc.subjectMERGERS
dc.subjectMORAL HAZARD
dc.subjectNEGOTIATION
dc.subjectNEGOTIATIONS
dc.subjectNONPAYMENT
dc.subjectOWNERSHIP INTERESTS
dc.subjectPENSION
dc.subjectPENSION FUNDS
dc.subjectPOLITICAL CONSIDERATIONS
dc.subjectPORTFOLIO
dc.subjectPOSSESSION
dc.subjectPOSSESSION FINANCING
dc.subjectPOST-PETITION FINANCING
dc.subjectPRIORITY CLAIM
dc.subjectPRIORITY CLAIMS
dc.subjectPRIORITY DEBT
dc.subjectPRIVATE LENDER
dc.subjectPRIVATE SECTOR DEVELOPMENT
dc.subjectREORGANIZATION
dc.subjectREORGANIZATION PROCESS
dc.subjectREORGANIZATIONS
dc.subjectREPAYMENT
dc.subjectRESTRUCTURING PLAN
dc.subjectRETIREMENT INCOME SECURITY
dc.subjectRETURN
dc.subjectRETURNS
dc.subjectRETURNS ON BONDS
dc.subjectRISK ASSESSMENTS
dc.subjectRISK FACTORS
dc.subjectRISKY DEBT
dc.subjectRULE OF BANKRUPTCY
dc.subjectRULE OF LAW
dc.subjectSALE DOCUMENTS
dc.subjectSECONDARY MARKET
dc.subjectSECURITIES
dc.subjectSECURITY INTEREST
dc.subjectSECURITY INTERESTS
dc.subjectSETTLEMENT
dc.subjectSETTLEMENTS
dc.subjectSTOCK MARKET
dc.subjectSTOCK MARKETS
dc.subjectSTOCK RETURN
dc.subjectSTOCK RETURNS
dc.subjectSTOCKS
dc.subjectTAX
dc.subjectTRADE CREDITORS
dc.subjectTRADING
dc.subjectTRADING COSTS
dc.subjectTRADING MARKETS
dc.subjectTRANSACTION
dc.subjectTREASURIES
dc.subjectTREASURY
dc.subjectTREASURY BONDS
dc.subjectTREASURY YIELD
dc.subjectUNSECURED CLAIM
dc.subjectUNSECURED CLAIMS
dc.subjectUNSECURED CREDITOR
dc.subjectUNSECURED CREDITORS
dc.subjectUNSECURED DEBT
dc.subjectUNSECURED OBLIGATIONS
dc.subjectVALUATION
dc.subjectWARRANTS
dc.subjectWEALTH EFFECTS
dc.subjectYIELD CURVE
dc.subjectYIELDS ON BONDS
dc.titleThe Chrysler Effect : The Impact of the Chrysler Bailout on Borrowing Costsen
dspace.entity.typePublication
okr.crossref.titleThe Chrysler effect: the impact of the Chrysler bailout on borrowing costs
okr.date.disclosure2010-10-01
okr.date.doiregistration2025-04-10T11:38:42.237319Z
okr.doctypePublications & Research::Policy Research Working Paper
okr.docurlhttp://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20101028130336
okr.guid146331468333067556
okr.identifier.doi10.1596/1813-9450-5462
okr.identifier.externaldocumentum000158349_20101028130336
okr.identifier.internaldocumentum12927836
okr.identifier.reportWPS5462
okr.language.supporteden
okr.pdfurlhttp://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2010/10/28/000158349_20101028130336/Rendered/PDF/WPS5462.pdfen
okr.region.administrativeThe World Region
okr.region.administrativeThe World Region
okr.sectorFinance :: General finance sector
okr.unitDevelopment Research Group (DECRG)
okr.unitDECRG: Finance & Priv Sec Devt (DECFP)
okr.volume1 of 1
relation.isSeriesOfPublication26e071dc-b0bf-409c-b982-df2970295c87
relation.isSeriesOfPublication.latestForDiscovery26e071dc-b0bf-409c-b982-df2970295c87
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