Financial distress may be more expensive if the:

Question

Quizplus · Accepted Answer

Limited information about the permanency of a shortfall can lead to uncertainty among creditors and investors, which may increase the cost of financial distress. Additionally, having many different types of creditors and investors can make the process of restructuring and reorganizing more complex, which can also increase costs. Finally, a firm that has never entered into bankruptcy before may be less prepared to navigate the process, which can also increase costs. Therefore, both A and B are correct.

Financial Distress May Be More Expensive If The