Strategic Bankruptcy: Does Forum Shopping Matter?

Purpose: This paper investigates whether bankruptcy forum shopping constitutes a strategic managerial choice that can shape corporate reorganization outcomes. Methodology: The study examines a large sample of U.S. firms filing for Chapter 11 between 1984 and 2016. Drawing on Hrebiniak and Joyce’s framework of strategic choice and environmental determinism, it employs logistic regressions and several robustness checks. Findings: Forum shopping increases the likelihood of successful emergence and reduces the probability of CEO turnover, suggesting that managers use venue selection to secure more favorable institutional settings. However, these effects are weaker or reversed in mass tort bankruptcies, where external scrutiny constrains managerial discretion. Additional evidence shows that forum shopping is also associated with a higher likelihood of refiling. Managerial implications: This study informs executives, boards, turnaround advisors, and policymakers that forum shopping is a strategic decision affecting restructuring success, leadership continuity, and the long-term stability of reorganization outcomes. Research limitations: The study is based on the U.S. Chapter 11 setting and on observational data; therefore, unobserved factors may still affect venue choice and reorganization outcomes. Originality: The paper contributes to management research by conceptualizing forum shopping as a strategic choice rather than a purely legal issue, showing how its effects depend on the interaction between managerial discretion and institutional constraints.