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Contribution Details
| Type | Journal Article |
| Scope | Discipline-based scholarship |
| Title | Indirect Costs of Financial Distress |
| Organization Unit | |
| Authors |
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| Item Subtype | Original Work |
| Refereed | Yes |
| Status | Published in final form |
| Language |
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| Journal Title | Review of Finance |
| Publisher | Oxford University Press |
| Geographical Reach | international |
| ISSN | 1572-3097 |
| Volume | 27 |
| Number | 6 |
| Page Range | 2233 - 2270 |
| Date | 2023 |
| Abstract Text | We estimate the indirect costs of financial distress due to lost sales by exploiting real estate shocks and cross-supplier variation in real estate assets and leverage. We show that for the same client buying from different suppliers, the client’s purchases from distressed suppliers decline by an additional 13% following a drop in local real estate prices. The effect is more pronounced in more competitive industries, manufacturing, durable goods, less-specific goods, and when the costs of switching suppliers are low. Our results suggest that clients reduce their exposure to suppliers in financial distress. |
| Free access at | DOI |
| Related URLs | |
| Digital Object Identifier | 10.1093/rof/rfad014 |
| Other Identification Number | merlin-id:23391 |
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