Disruption and Credit Markets

Bo Becker and Victoria Ivashina

Journal of Finance, 2023, vol. 78, issue 1, 105-139

Abstract: We show that over the past half‐century, innovative disruptions were central to understanding corporate defaults. In a given year, industries experiencing abnormally high venture capital or initial public offering activity subsequently see higher default rates, higher segment exits by conglomerates, and higher yields on bonds issued by the firms in these industries. Overall, we find that disruption is a broad phenomenon, negatively affecting incumbent firms across the spectrum of age, valuation, and levers, with the exception of very large and low‐leverage firms, in line with our central hypothesis.

Date: 2023
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https://doi.org/10.1111/jofi.13187

Related works:
Working Paper: Disruption and Credit Markets (2022)
Working Paper: Disruption and Credit Markets (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:bla:jfinan:v:78:y:2023:i:1:p:105-139

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