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Contagious Negative Sentiment and Corporate Policies: Evidence from Local Bankruptcy Filings
Niessen-Ruenzi, Alexandra
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Addoum, Jawad M.
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Le, Nhan
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DOI:
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https://doi.org/10.2139/ssrn.2490742
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URL:
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http://papers.ssrn.com/sol3/papers.cfm?abstract_id...
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Dokumenttyp:
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Arbeitspapier
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Erscheinungsjahr:
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2014
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Titel einer Zeitschrift oder einer Reihe:
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SSRN Working Paper Series
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Ort der Veröffentlichung:
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Rochester, NY
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Sprache der Veröffentlichung:
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Englisch
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Einrichtung:
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Fakultät für Betriebswirtschaftslehre > Business Administration and Corporate Governance (Stiftungsprofessur)
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Fachgebiet:
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330 Wirtschaft
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Abstract:
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This study shows that corporate bankruptcy events affect the investment and financing policies of geographically proximate firms. Following the bankruptcy of a local peer, non-filing local firms significantly reduce investment expenditures, reduce capital structure leverage, and hold more cash. The effects of local bankruptcy are more pronounced when the CEO of the filing firm is dismissed, and stronger among firms managed by CEOs who are relatively young, have fewer qualifications, and relatively short tenure. Firms that have board connections with the bankrupt firms also react more strongly to the distress events. Importantly, the spillover effects associated with geographic proximity cannot be explained by intra-industry or supply chain effects documented in the extant literature. We also find that the effects cannot be explained by shocks to the local economy. Collectively, these results suggest that corporate managers follow the availability heuristic and become overly conservative in their investment and financial policies in response to local distress events.
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 | Dieser Eintrag ist Teil der Universitätsbibliographie. |
 Suche Autoren in
BASE:
Niessen-Ruenzi, Alexandra
;
Addoum, Jawad M.
;
Le, Nhan
Google Scholar:
Niessen-Ruenzi, Alexandra
;
Addoum, Jawad M.
;
Le, Nhan
ORCID:
Niessen-Ruenzi, Alexandra  ORCID: https://orcid.org/0000-0002-9493-8280, Addoum, Jawad M. and Le, Nhan
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