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
Date Written: November 19, 2012
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: Suggested Citation