Financial Strength and Product Market Competition: Evidence from Asbestos Litigation

Hadlock, Charles J.; Sonti, Ramana

doi:10.1017/s0022109011000639

Cited by 31 publications

(4 citation statements)

References 53 publications

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“…The more cash inflows from operating activities, new financing, and the earnings from investments entering the reservoir, and the lower cash outflows exit from the reservoir, the lower the bankruptcy likelihood. Hadlock and Sonti (2012) show that when firms increases their financial leverage, the market considers this expansion as negative news, which increases bankruptcy likelihood.…”

Section: Review Of Literaturementioning

confidence: 99%

Intellectual capital, liquidity, and bankruptcy likelihood

Shahdadi

Rostamy

Sharif

et al. 2020

J Corp Accounting Finance

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This study investigates the impacts of intellectual capital on the liquidity of assets and stocks and the bankruptcy likelihood. Multivariate regression models with combined data used to test the hypotheses. Using a sample of 147 companies listed on the Tehran Stock Exchange during 2010-2017, the results indicate that intellectual capital has a positive effect on the liquidity of assets and the liquidity of stocks, and that it has an inverse relation with the bankruptcy likelihood. Moreover, we found that the liquidity of assets has a negative effect on the bankruptcy likelihood. However, the liquidity of stocks has no significant effect on the bankruptcy likelihood. In general, the findings of this study provide evidence of the effective role of intellectual capital in improving the liquidity of assets and the impacts of both the intellectual capital and the liquidity on reducing the bankruptcy likelihood. This study provides evidence of the prominent role of intellectual capital in the intelligent management of corporate liquidity and reducing the likelihood of bankruptcy.

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Section: Review Of Literaturementioning

confidence: 99%

Intellectual capital, liquidity, and bankruptcy likelihood

Shahdadi

Rostamy

Sharif

et al. 2020

J Corp Accounting Finance

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“…See, among others,Zingales (1998),Campello (2003Campello ( ), (2006,Fresard (2010), andHadlock and Sonti (2012).5 Khanna and Tice (2001) show that diversified firms are quicker to choose appropriate competitive strategies subsequent to Walmart's entry to their markets Guedj and Scharfstein (2004). investigate biopharmaceutical firms to show multiple-product firms are more willing to abandon unpromising drug candidates compared with single-product firms.6 See Shin and Stulz (1998) andVillalonga (2004a) for additional discussion.…”

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confidence: 99%

Financial Weakness and Product Market Performance: Internal Capital Market Evidence

Kim¹

2016

J. Financ. Quant. Anal.

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Using a data set of Korean business groups in the period 1999–2006, just after the Asian Financial Crisis, this study shows how business groups’ financial leverage can lead group-affiliated firms to lose market share to industry rivals. This analysis reveals that the negative effect of group leverage is greater when an affiliated firm is financially weak. Additionally, high group leverage is more detrimental to firms operating in fast-growing industries, discouraging affiliated firms from investing while encouraging their rivals. The results suggest that groups’ financial positions encompass a substantial strategic dimension of group-affiliated firms.

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“…If consumers react to this shock, the emission scandal could represent a "game-changer" allowing clean technologies to overtake dirty technologies. There is also the risk that an environmental scandal at one firm has competitive effects (Hadlock and Sonti, 2012;Roehm and Tybout, 2006) by, e.g., inducing consumers to switch firm but not product type. Our results show that -at least in the shorter run -negative demand-side effects seem to be centered around Volkswagen but not diesel cars as such.…”

Section: Introductionmentioning

confidence: 99%