Evaluating Corporate Bailouts and Bankruptcy: An Economic Debate

This discussion board post delves into the debate surrounding corporate bailouts versus corporate bankruptcy, with the author advocating for corporate bailouts as a preferable solution. The argument centers on the idea that bailouts provide struggling companies with the necessary capital infusion to avoid complete failure, allowing them to recover and contribute to economic stability. The author contends that corporate bankruptcy, conversely, can lead to the dissolution of companies, negatively impacting stakeholders, related institutions, and overall employment rates. The discussion emphasizes the role of government support in facilitating bailouts and highlights the potential for bailouts to maintain economic health by preventing widespread debt and business closures. Additional posts in the discussion agree with the initial argument, reinforcing the importance of bailouts in financial recapitalization and long-term economic stability, particularly for financial institutions facing crises such as cybercrime. The arguments presented are supported by references to academic journals and news articles, providing a comprehensive overview of the bailout versus bankruptcy debate.

Running Head: CORPORATE BAILOUTS 1
Title
Student’s name
Institution’s name

CORPORATE BAILOUTS 2
Corporate Bailouts
Response 1
Hello,
To expound on my work, corporate bailouts are of more benefit and of great efficiency
compared to corporate bankruptcy. Corporate bailouts are better because they help companies
that are about to be bankrupt to obtain help from an external organization or the government. It
gives chance to for the company to thrive again and get to its initial financial level. If it is
achieved, the company fades gracefully without affecting the external institutions (Bernardo,
Talley& Welch, 2016). As I initially indicated, bailouts are essential and can serve a great deal in
helping institutions to curb the threat of bankruptcy.
Corporate bankruptcy, on the other hand, has a lot of risks and may lead to the ultimate
closure of a corporation. The secured and unsecured corporates after requesting for their debts, it
leads to the termination of the corporation. The stakeholders may fail to get anything from the
company after its dissolution (DelliSanti, & Wagner, 2018). The closure of the company which
under operates under corporate bankruptcy may affect other institutions which are connected to
its deals and operations.
The government should fully support the bailouts by making sure that there exist
programs that help that companies not to run bankrupt. For corporation working on a worldwide
basis, bailouts are of must help since they have support from different financial institutions. For
companies facing financial problems, bailouts can help a great deal in reviving them back to their
original level without risks of managing debts. Bailouts also help maintain the economy of a
country by enabling elimination of debts.

CORPORATE BAILOUTS 3
Response 2
Hello,
I agree with you on the issue of the bailout. The bailout is an asset which is responsible
for financial recapitalization in case of their total collapse (Keister, 2015). Bailout rebuilds a
company’s confidence through the provision of funds in times of crisis. As a result, the company
or companies are able to get back on their feet and are able to work hard to ensure that they get
back to where they were before the fall. Basically, the firms that receive bailouts have higher
chances of recovery than those which do not in case they get bankruptcy (Kramer, 2015).
Bankruptcy is a major threat to corporate industry and therefore, businesses especially those that
solely deals with finances such as banks should consider bailouts. The financial businesses, for
instance, may be able to survive in the market for a long-term even with challenges such as
cybercrime that contributes to its failure with the aid of bailout.
The bailout may either give a financial business, for instance, its support which can either
be in form of a loan, stock or cash for its revival. With bailout being a life saver, the government
should, therefore, consider funding the bailout program for the purposes of economic stability
which is for the well being of the country and its citizens. On the failure of a business, there will
be fewer employment opportunities which will lead to less spending by the general public and
finally, declined economy. Usually, the economy of any nation defines its stability level in terms
of revenue to the government and thus, it is the role of the government to ensure it supports the
bailout program.

CORPORATE BAILOUTS 4
References
Bernardo, A. E., Talley, E. L., & Welch, I. (2016). Designing corporate bailouts. The Journal of Law and
Economics, 59(1), 75-104.
DelliSanti, D., & Wagner, R. E. (2018). Bankruptcies, bailouts, and some political economy of corporate
reorganization. Journal of Institutional Economics, 1-19.
Keister, T. (2015). Bailouts and financial fragility. The Review of Economic Studies, 83(2), 704-736.
Kramer, A. E. (2015). Russia’s well for corporate bailouts appears to be running dry. New York Times,
10.