Gender Gap in Debt Renegotiation

We study the role of gender in corporate debt renegotiation. Using in-court reorganizations from Brazil, we find that male-led creditors are more likely to reject plans put forward by female-led debtors. Although we cannot definitively identify the underlying mechanism driving this pattern, our findings align more consistently with gender-based discrimination compared with alternative explanations. This behavior may be costly: Female-led debtors deliver higher recoveries under reorganization than under liquidation, implying that rejections potentially create deadweight losses. Supporting a miscalibrated-beliefs explanation, we observe that the gender-based rejection gap narrows when male creditors have prior exposure to successful female-led businesses, pointing to a potential path for mitigation.

This paper was accepted by Bo Becker, finance.

Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2024.05802.