Indirect costs of bankruptcy are borne principally by
A)bondholders.
B)stockholders.
C)managers.
D)the government.

Question

Quizplus · Accepted Answer

Indirect costs of bankruptcy refer to the intangible, long-term consequences that impact stakeholders such as customers, suppliers, and employees. The stockholders, who are the residual claimants of a firm, bear the majority of these costs due to the significant decrease in the firm's market value caused by bankruptcy. They may also lose their entire investment or receive lesser payouts in case of asset liquidation.

Indirect Costs of Bankruptcy Are Borne Principally by