Work

Firms’ Management of Infrequent Shocks

Year: 2019

Type: article

Abstract: We examine businesses’ financial management of a rare, severe event using detailed firm‐level data collected following Hurricane Sandy in the New York area. Credit played a prominent role in financing recovery; more negatively affected firms took on debt because of Sandy (39%) than received insurance payments (15%) in our data. Negatively affected firms were frequently credit constrained after the shock. We also find that the most credit‐constrained firms after the event, younger firms, and smaller firms, were the least likely to insure before it. Our findings align with the predictions of dynamic risk management theory (Rampini and Viswanathan 2010, 2013).

Source: Journal of money credit and banking

DOI: 10.1111/jmcb.12674

Authors: BENJAMIN L. COLLIER, ANDREW F. HAUGHWOUT, HOWARD C. KUNREUTHER, ERWANN O. MICHEL‐KERJAN

Institutions: National Bureau of Economic Research, Federal Reserve Bank of New York, University of Pennsylvania, Temple University

Language: English

Topic: Corporate Finance and Governance

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

Open Access status: bronze

Funders: U.S. Department of Homeland Security, U.S. Small Business Administration, University of Southern California

OpenAlex ID: W2606651387

FWCI: 6.366

Cites: 30

Cited by: 45

Related to: 10