Debt Source Choices and Stock Market Performance of Russian Firms During the Financial Crisis

22 Pages Posted: 17 Aug 2012 Last revised: 1 Nov 2013

See all articles by Denis Davydov

Denis Davydov

University of Vaasa - Department of Accounting and Finance

Sami Vähämaa

University of Vaasa

Date Written: November 19, 2012

Abstract

This paper examines the relationship between stock returns and the sources of corporate debt during the financial crisis of 2008. In particular, using data on large-capitalization Russian firms, we investigate whether dependence on either bank debt or bonds affected stock returns during the credit crunch. Our results indicate that the firms which rely entirely on bank debt significantly outperformed the firms with public debt amidst the crisis. This finding suggests that bank debt may be particularly valuable in harsh times. However, we also document that the stock prices of bank dependent firms recovered more slowly in the post-crisis period.

Keywords: Debt sources, Bank dependence

JEL Classification: G01, G21, G32

Suggested Citation

Davydov, Denis and Vähämaa, Sami, Debt Source Choices and Stock Market Performance of Russian Firms During the Financial Crisis (November 19, 2012). Emerging Markets Review, Vol. 15, No. 1, pp. 148-159, 2013. Available at SSRN: https://ssrn.com/abstract=2131190 or http://dx.doi.org/10.2139/ssrn.2131190

Denis Davydov

University of Vaasa - Department of Accounting and Finance ( email )

P.O. Box 700
FIN-65101 Vaasa, FI-65101
Finland
+358 6 3248 268 (Phone)

Sami Vähämaa (Contact Author)

University of Vaasa ( email )

P.O. Box 700
Vaasa, FI-65101
Finland
+358 29 449 8455 (Phone)

HOME PAGE: http://www.uva.fi/~sami

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