THE COLLAPSE OF 1ST-EXECUTIVE-CORPORATION JUNK BONDS, ADVERSE PUBLICITY, AND THE RUN ON THE BANK PHENOMENON

• 成果类型: Article
• 署名作者: DEANGELO, H; DEANGELO, L; GILSON, SC
• 署名单位: Harvard University
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/0304-405X(94)90008-6
• 发表日期: 1994
• 页码: 287-336
• 关键词: junk bonds; Bank runs; insurance; Financial distress; politics of finance

摘要

In April 1991, regulators seized the major subsidiaries of First Executive Corporation (FE), an insurer that invested heavily in junk bonds. During the junk bond market turmoil of 1989-1990, adverse publicity fueled a bank run at FE, forcing a $4 billion portfolio liquidation before the market rose 50-60% in 1991-1992. More traditional insurers did not receive commensurate press coverage, despite their substantial exposure to real estate declines, which were roughly 2.5 times the junk bond decline. Seizure of FE's subsidiaries was defensible, although FE would have become solvent within a year, given average junk bond market appreciation.