Document Type
Article - post-print
Publication Date
2012
Abstract
Spreads on new and renegotiated corporate loans are significantly higher when the loan originates (or is renegotiated) in the two years surrounding bankruptcy filings by industry rivals. This industry-specific contagion is particularly severe in the middle of industry bankruptcy waves. Furthermore, this contagion in loan spreads is mitigated in concentrated industries, consistent with the hypothesis and evidence in Lang and Stulz (1992) that bankruptcy filings in concentrated industries can have positive consequences for rivals (increased market share and/or power). There is also some evidence that contagion affects non-spread terms in loan contracts.
Original Publication Citation
Hertzel, M. G., & Officer, M. S. (2012). Industry contagion in loan spreads. Journal Of Financial Economics, 103493-506. doi:10.1016/j.jfineco.2011.10.012
Publisher Statement
This is an author-manuscript of an article accepted for publication in Journal of Financial Economics. The version of record Hertzel, M. G., & Officer, M. S. (2012). Industry contagion in loan spreads. Journal Of Financial Economics, 103493-506 is available online at: doi:10.1016/j.jfineco.2011.10.012.
Digital Commons @ LMU & LLS Citation
Hertzel, Michael G. and Officer, Micah S., "Industry Contagion in Loan Spreads" (2012). Finance Faculty Works. 14.
https://digitalcommons.lmu.edu/fina_fac/14
