Company value and behavioral finance during insolvency

Ingo Lange

2005

Sometimes individuals behave irrationally when things get complex and become uncertain. Despite fairly adequate statutory insolvency rules, this can lead to delays in insolvency payment and/or economically inefficient use of corporate resources. This means that current insolvency law should be augmented with potential act plans, which should especially take human (error) behavior into account.

Ingo Lange takes a detailed analytical look at insolvency rules. This includes a view toward value determinants such as "insolvency effective date", "alternative uses" and "distribution of value". He disregards the assumption that everyone will act rationally, and uses scientific findings from behavioral finance. He uses a synthesis of legal and behavioral inefficiencies to develop specific courses of actions. These are intended to help streamline the process of corporate insolvency proceedings.