Article ID Journal Published Year Pages File Type
7356029 Journal of Accounting and Economics 2018 50 Pages PDF
Abstract
Using the collapse of the junk bond market in the early 1990s as an exogenous shock to external capital, I document, in both difference-in-differences and triple difference designs, that speculative-grade firms that recognize economic losses in a timely manner experience a smaller reduction in investment following the collapse. The effect is more pronounced for speculative-grade firms with a low level of asset liquidation value. Using the excess bond premium as a proxy for fluctuations in the supply of capital, I also extend the generalizability of my findings to a broader sample of 84,421 firm-years over the 1972-2011 period.
Related Topics
Social Sciences and Humanities Business, Management and Accounting Accounting
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