Flexibility costs of debt: Danish exporters during the cartoon crisis

• 成果类型: Article
• 署名作者: Friedrich, Benjamin U.; Zator, Michal
• 署名单位: Northwestern University; Aarhus University; University of Notre Dame
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2023.03.001
• 发表日期: 2023
• 页码: 91-117
• 关键词: flexibility; capital structure; Product markets; Consumer boycott

摘要

We study how firms respond to an unexpected demand shock, exploiting the 2006 boycott of Danish products after publication of Muhammad caricatures. On average, affected firms lose the majority of their exports to Muslim countries and experience a significant decrease in total sales. However, firms with low financial leverage redirect sales to new and existing product-destination markets in non-Muslim countries, which allows them to fully offset their losses. In contrast, high-leverage firms do not enter new markets and instead actively downsize. Our results highlight the importance of financial flexibility in times of crisis, consistent with declarations of practitioners.(c) 2023 Elsevier B.V. All rights reserved.