Indirect Costs of Financial Distress in Durable Goods Industries: The Case of Auto Manufacturers

• 成果类型: Article
• 署名作者: Hortacsu, Ali; Matvos, Gregor; Syverson, Chad; Venkataraman, Sriram
• 署名单位: University of Chicago; National Bureau of Economic Research; University of Chicago
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hht006
• 发表日期: 2013
• 页码: 1248
• 关键词: capital structure; benefits; liquidation; PRODUCTS

摘要

Financial distress can disrupt a durable goods producer's provision of complementary goods and services such as warranties, spare parts and maintenance. This reduces consumers' demand for the core product, causing indirect costs of financial distress. We test this hypothesis in the market for used cars sold at wholesale auctions. An increase in a manufacturer's credit default swaps significantly decreases the prices of its cars at auction, especially cars with longer expected service lives. Our estimates imply substantial indirect costs of financial distress for car manufacturers. These costs have occasionally even exceeded the tax savings benefits for General Motors and Ford.