Product Market Competition and Financial Decisions During a Financial Crisis

Soku Byoun, Zhaoxia Xu

Research output: Contribution to journalArticle

Abstract

We find that in the presence of the "flight to quality" during the 2007-2008 financial crisis, firms that depended less on external financing (or internal finance dependent (IFD) firms) prior to the crisis were able to secure additional financing and increased investments, while external finance dependent (EFD) firms significantly contracted their external financing and investments. IFD firms' increased investments during the crisis were associated with higher market share growth, while EFD competitors lost their market share. The results indicate that firms' financial decisions during the financial crisis are interrelated with their product market dimensions.

Original languageEnglish (US)
JournalFinancial Management
DOIs
StateAccepted/In press - 2015

Fingerprint

Financial decisions
Financial crisis
Product market competition
Finance
Market share
External finance
External financing
Competitors
Firm investment
Financing
Flight to quality
Product market

ASJC Scopus subject areas

  • Finance
  • Accounting
  • Economics and Econometrics

Cite this

Product Market Competition and Financial Decisions During a Financial Crisis. / Byoun, Soku; Xu, Zhaoxia.

In: Financial Management, 2015.

Research output: Contribution to journalArticle

@article{73ef09e4d6fb474a9033b006f7cc360c,
title = "Product Market Competition and Financial Decisions During a Financial Crisis",
abstract = "We find that in the presence of the {"}flight to quality{"} during the 2007-2008 financial crisis, firms that depended less on external financing (or internal finance dependent (IFD) firms) prior to the crisis were able to secure additional financing and increased investments, while external finance dependent (EFD) firms significantly contracted their external financing and investments. IFD firms' increased investments during the crisis were associated with higher market share growth, while EFD competitors lost their market share. The results indicate that firms' financial decisions during the financial crisis are interrelated with their product market dimensions.",
author = "Soku Byoun and Zhaoxia Xu",
year = "2015",
doi = "10.1111/fima.12096",
language = "English (US)",
journal = "Financial Management",
issn = "0046-3892",
publisher = "John Wiley and Sons Inc.",

}

TY - JOUR

T1 - Product Market Competition and Financial Decisions During a Financial Crisis

AU - Byoun, Soku

AU - Xu, Zhaoxia

PY - 2015

Y1 - 2015

N2 - We find that in the presence of the "flight to quality" during the 2007-2008 financial crisis, firms that depended less on external financing (or internal finance dependent (IFD) firms) prior to the crisis were able to secure additional financing and increased investments, while external finance dependent (EFD) firms significantly contracted their external financing and investments. IFD firms' increased investments during the crisis were associated with higher market share growth, while EFD competitors lost their market share. The results indicate that firms' financial decisions during the financial crisis are interrelated with their product market dimensions.

AB - We find that in the presence of the "flight to quality" during the 2007-2008 financial crisis, firms that depended less on external financing (or internal finance dependent (IFD) firms) prior to the crisis were able to secure additional financing and increased investments, while external finance dependent (EFD) firms significantly contracted their external financing and investments. IFD firms' increased investments during the crisis were associated with higher market share growth, while EFD competitors lost their market share. The results indicate that firms' financial decisions during the financial crisis are interrelated with their product market dimensions.

UR - http://www.scopus.com/inward/record.url?scp=84949294499&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=84949294499&partnerID=8YFLogxK

U2 - 10.1111/fima.12096

DO - 10.1111/fima.12096

M3 - Article

JO - Financial Management

JF - Financial Management

SN - 0046-3892

ER -