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http://hdl.handle.net/11375/25249
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DC Field | Value | Language |
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dc.contributor.author | Lei, Jin | - |
dc.contributor.author | Qiu, Jiaping | - |
dc.contributor.author | Wan, Chi | - |
dc.contributor.author | Yu, Fan | - |
dc.contributor.author | Michael Lee-Chin & Family Institute for Strategic Business Studies | - |
dc.date.accessioned | 2020-02-07T21:01:40Z | - |
dc.date.available | 2020-02-07T21:01:40Z | - |
dc.date.issued | 2019-04 | - |
dc.identifier.uri | http://hdl.handle.net/11375/25249 | - |
dc.description | 53 p. ; Includes bibliographical references (pp. 32-39). ; "April 25, 2019"; Authors are "grateful to George Batta, Eric Helland, Eric Hughson, Oana Tocoian, Angela Vossmeyer, and participants at the CMC Summer Research Workshop for helpful comment." | en_US |
dc.description.abstract | This paper examines how credit risk spillovers affect corporate financial flexibility. We construct separate empirical proxies to disentangle the two channels of credit risk spillovers — credit risk contagion (CRC), which increases industry peers’ distress likelihood; and product market rivalry (PMR), which strengthens rivals’ competitive position. We show that firms facing greater CRC hold more cash, make lower payouts, and must contend with less favorable bank loan terms. In contrast, PMR generally has opposite, albeit weaker, effects. Our findings suggest that credit risk spillovers, especially CRC, play an important role in corporate liquidity management. Valuation Insight: Credit risk contagion susceptibility appears to negatively affect a firm’s valuation. This comes about through the firm electing to hold more cash and accepting less favorable bank loan terms. | en_US |
dc.language.iso | en | en_US |
dc.relation.ispartofseries | Michael Lee-Chin & Family Institute for Strategic Business Studies Working Paper;2019-04 | - |
dc.subject | Credit risk contagion | en_US |
dc.subject | Product market rivalry | en_US |
dc.subject | Financial distress | en_US |
dc.subject | Cash holdings | en_US |
dc.subject | Payout ratio | en_US |
dc.subject | Bank loan contracting | en_US |
dc.title | Credit risk spillovers and cash holdings [update of 2018-06] | en_US |
dc.type | Working Paper | en_US |
Appears in Collections: | Michael Lee-Chin & Family Institute for Strategic Business Studies Working Paper Series |
Files in This Item:
File | Description | Size | Format | |
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sbv_wp_2019-04.pdf | 426.73 kB | Adobe PDF | View/Open |
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