Does peer firms' debt default have positive externalities: The investment efficiency perspective

Long Jin, Yuhang Song and Changchun Pan

Finance Research Letters, 2024, vol. 59, issue C

Abstract: This paper examines the positive externalities of peer firms' debt default based on the investment efficiency perspective using data from Chinese listed companies from 2007 to 2021. We robustly find that peers' debt default significantly increases the focal firm's investment efficiency. Moreover, peers' debt default generates positive externalities through investor attention and product market competition mechanisms. Additionally, our findings indicate that online platform interaction and industry tournament incentive enhance these positive externalities. Our study promotes a more nuanced understanding of debt default.

Keywords: Peer firms; Debt default; Positive externality; Investment Efficiency (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:59:y:2024:i:c:s1544612323011595

DOI: 10.1016/j.frl.2023.104787

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