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Financial distress and corporate investment

Type
conference paper
Date Issued
2017-01-16
Author(s)
García-Appendini, Emilia  
Abstract (De)
This paper analyzes whether the financial distress of a firm affects the investment decisions of non-distressed competitors. On average, firms in distress impose indirect costs to non-distressed competitors by increasing costs of credit in the industry and hence restricting credit access and investment. These average negative spillover effects continue to hold in the absence of industry downturns. However, the negative effects are temporary, and are mitigated for firms with stronger balance sheets or in concentrated markets. These results are consistent with theories suggesting that firms with strong balance sheets prey on their weaker rivals to improve their market position.
Language
English
HSG Classification
contribution to scientific community
Event Title
2017 Latin American Conference
Event Location
Mexico City
Event Date
16-17 February 2017
URL
https://www.alexandria.unisg.ch/handle/20.500.14171/102720
Subject(s)

economics

business studies

finance

Division(s)

s/bf - Swiss Institut...

Contact Email Address
emilia.garcia@unisg.ch
Eprints ID
250533
File(s)
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Thumbnail Image

open.access

Name

2017 01 17_InvestmentBankruptcy_complete.pdf

Size

631.42 KB

Format

Adobe PDF

Checksum (MD5)

387facae968dfc9ec2f7dc4f56b30cf6

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