Creative Destruction and Cycles in the US Capital Market: Evidence from Fortune 500 Firms

Debojyoti Chakraborty and Kaushik Bhattacharya ()

MPRA Paper from University Library of Munich, Germany

Abstract: The paper analyzes the relationship between creative destruction and cycles in the US capital market. Creative destruction in a year is measured by the number of new firms in the Fortune 500 list. Creative destruction is found to be positively associated with smoothed annual returns based on the Dow Jones Index (DJI), signifying that new entries in Fortune 500 tend to be more during boom than during recession years. Easier financing of innovative ideas during boom is hypothesized as a reason behind such positive association.

Keywords: Creative Destruction; Business Cycle. (search for similar items in EconPapers)
JEL-codes: E32 (search for similar items in EconPapers)
Date: 2009
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Forthcoming in Empirical Economics Letters 7.9(2010): pp. 691-695

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