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SUMMARY:Feedback and Contagion through Distressed Competition.
DTSTART:20201120T160000
DTEND:20201120T173000
DTSTAMP:20260407T064014Z
UID:fbce0d4f0483b331414203bc30aa49225e69f77f061e1960b2e33c3e
CATEGORIES:Conferences - Seminars
DESCRIPTION:Winston DOU\, The University of Pennsylvania\nFirms tend to co
 mpete more aggressively in financial distress\; the intensified competitio
 n in turn reduces profit margins for everyone\, pushing some further into 
 distress. To study such feedback and contagion effects\, we incorporate dy
 namic strategic competition into an industry equilibrium with long-term de
 faultable debt\, which generates various peer interactions: predation\, se
 lf-defense\, and collaboration. Such interactions make cash flows\, stock 
 returns\, and credit spreads interdependent across firms. Moreover\, indus
 tries with higher idiosyncratic-jump risks are more distressed\, yet also 
 endogenously less exposed to aggregate shocks. Finally\, we exploit exogen
 ous variations in market structure  - large tariff cuts -- to test the co
 re competition mechanism.
LOCATION:Zoom
STATUS:CONFIRMED
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