Finance Research Seminar - Geoffrey TATE
University of Northern Carolina, Kenan-Flagler Business School
Wednesday 28 November 2018 (10h30 - 12h00) - Extranef - 118
Friends during Hard Times: Evidence from the Great Depression
Using a novel dataset of over 3500 public and private firms, we construct the network of firm connections through executives and directors on the eve of the 1929 financial market crash. We find that more connected firms have higher 10-year survival rates, on average and using geographic market segmentation for identification. Consistent with a financing channel, the results are particularly strong for small firms, private firms, cash-poor firms, and firms located in counties with high bank suspension rates during the crisis. Moreover, connections to cashrich firms, but not to cash-poor firms predict survival, overall and among financially constrained firms.
HEC Department of Finance