Indirect costs of bankruptcy are born principally by:
A)bondholders.
B)shareholders.
C)managers.
D)the federal government.
E)the firm's suppliers.

Question

Quizplus · Accepted Answer

The indirect costs of bankruptcy, such as the loss of reputation and decreased future investment opportunities, are typically borne by the firm's shareholders, as they are the owners of the company and will see a reduction in the value of their investment. Bondholders may also experience some indirect costs, but they are typically more protected by the terms of their bonds. Managers and the federal government may also be affected by bankruptcy, but they do not typically bear the same level of indirect costs as shareholders. Suppliers may be affected by bankruptcy in terms of lost business, but this is typically considered a direct cost rather than an indirect cost.

Indirect Costs of Bankruptcy Are Born Principally By