The Solar Shakeout - Capital Market Reactions to Bankruptcy Announcements in the German Solar Industry

54 Pages Posted: 27 Dec 2015 Last revised: 10 Apr 2016

See all articles by Thomas Kaspereit

Thomas Kaspereit

Universite du Luxembourg

Kerstin Lopatta

University of Hamburg - Faculty of Business, Economics, and Social Sciences

Date Written: April 3, 2016

Abstract

This paper investigates how bankruptcy announcements in the German solar industry affect the stock market returns of announcing firms and their competitors. We show that German solar firms experience negative capital market reactions to their own bankruptcy announcements and to the announcements of their competitors. Cross-sectional analysis reveals that these negative information externalities are magnified by higher leverage. Further analysis also indicates that these negative information externalities are valuable predictors in short-term default probability models.

Keywords: Bankruptcy Announcements, Spillover Effects, Negative Information Externalities, Competition Effects, Event Study, Photovoltaic Industry, Solar Industry

JEL Classification: G14, G33, Q42

Suggested Citation

Kaspereit, Thomas and Lopatta, Kerstin, The Solar Shakeout - Capital Market Reactions to Bankruptcy Announcements in the German Solar Industry (April 3, 2016). Available at SSRN: https://ssrn.com/abstract=2708116 or http://dx.doi.org/10.2139/ssrn.2708116

Thomas Kaspereit (Contact Author)

Universite du Luxembourg ( email )

Université du Luxembourg
Campus Limpertsberg,
Luxembourg, 1511
Luxembourg

Kerstin Lopatta

University of Hamburg - Faculty of Business, Economics, and Social Sciences ( email )

Von-Melle-Park 9
Hamburg, 20146
Germany

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